PRIMITIVE ACCUMULATION OF CAPITAL

How Did Somali Pirates Get Paid?

File image

PUBLISHED AUG 27, 2021 3:41 PM BY THE MARITIME EXECUTIVE

 

Rob Phayre, a former ransom delivery specialist who helped shipowners retrieve vessels and crews from pirates, has written a new novel based on his experiences off Somalia. He recently corresponded with The Maritime Executive about the nature of the work and the root causes of Somali piracy. 

TME: To start, can you tell us about yourself and your career in resolving hostage situations?

I started my career with seven years as a British military helicopter pilot, and I commanded a flight of helicopters in the Second Gulf War. I had the privilege to fly the first British Army helicopter across the border into Iraq on the first day of the war. I also flew in Northern Ireland during The Troubles. Perhaps one of my best experiences was in supporting British special forces when doing their jungle training in West Africa.

After leaving the British Army, I lived in Africa for nearly 17 years, but I was only involved in resolving Somali pirate attacks for about three of those years. During that time, I worked on more than 30 projects delivering ransoms to Somali pirates. I have also supported a number of organizations resolving other onshore kidnapping incidents. If I had to put a figure on the total amount delivered in ransom, it’s just under $100 million.

TME: Can you tell us about how you would arrange for ransom deliveries?

We developed a special mechanism that allowed us to drop the ransom out of an aircraft by parachute. The pirates would collect the money after it fell into the water, take it to the ship, count it and then leave. At that point another team that we had already pre-positioned would board the ship, cross load supplies, help the crew get it underway again and escort it to the nearest safe port.

There were a number of risks during those projects. Delays could mean the pirates would lose patience and we would have to go back to the negotiating table. The money delivery could fail. We never lost a load to a bad drop, but it was close occasionally. The pirates might not have left the ship after we paid the ransom, or the rescue team could get attacked on the way to collect the ship.  We managed all of those risks to the best of our ability.

During the peak of piracy, my team and I delivered a ransom that was worth just under $15 million. To give you an idea of scale, that’s about 160 kilos of hundred-dollar bills - about seven large Samsonite suitcases' worth. It remains to this day one of the largest ransoms paid for hostage taking at sea.

TME: Did the pirates always leave the ship once they were paid, or did they ever try to hold out for more money?

For the projects I worked on, yes. Simply put, they were businesspeople - granted, businesspeople with no moral values, but still businesspeople.  If they hadn’t surrendered the ship after a delivery, then they wouldn’t have been paid again. They would accrue all the costs of running their projects and not get any more financial rewards. I am aware of several projects where hostages didn’t get released after a payment, but in many cases, they were not negotiated professionally.

TME: Do governments get involved in negotiating with pirates and paying ransoms?

It’s a very grey area. It depends on the government and the part of the world where the hostage taking has happened. The French government, for example, has passed laws that state that they will pay ransoms to get their citizens back. In fact, there have been a number of protests when they haven’t. Most Western governments will publicly say that they don’t make substantive concessions to pirates. That is the right approach in my opinion. 

Nation-states making payments with unlimited funds just raises the cost of ransoms for everyone else. However, it is also right that individuals, if they choose to, should be able to pay ransom to release their loved ones. That all works fine and is generally ignored by governments as long as payments are not made to terrorist organisations.

If terrorists are involved, that’s much trickier. You can’t pay them legally, even through third parties. On the plus side, governmental support may be more likely to happen - but that usually results in a security service response. The risk to the hostage goes up considerably.

This became a concern several years into the antipiracy response off Somalia. As soon as there was a lull in the number of vessels being held by pirates, Western governments determined that the risk of inadvertently paying money to terrorist organizations in Somalia was too high, and they made it a very serious offence to pay ransom. I am not aware of any proof that any ransom was ever directly paid to a terrorist group for maritime piracy in Somalia, but there was always the potential for side payments or protection money being paid by the piracy groups. It was certainly a factor in the decision process for many risk management companies.

A final word on maritime terrorism: this is different from piracy or criminality. The objective is completely different. With terrorism, an actor will target either a specific vessel or a specific flag state to enhance their political aims. Money has nothing to do with it.

TME: What were the root causes of Somali piracy?

I believe that the commonly used explanation of foreign offshore fishing vessels plundering the Somali coast is used too often as an argument. Sure, it’s a potential catalyst, but money and power were the key drivers once they were available. Warlords and clan chiefs could raise huge sums of money, equip their personal forces and expand their fiefdoms. Individuals could earn a living that just wasn’t available to them before. Most of the political leadership didn’t have the power or reach to be able to police the whole of the coastline, and those who did have the ability were most likely corrupt. The existence of a failed state provided safe harbor for pirates to bring home their catch and negotiate their release.

TME: How can piracy be defeated?

In the longer term, only sustainable development, other employment opportunities, the removal of available targets, rule of law and effective military response are the way to continue bringing down the maritime piracy risk.

Rob Phayre is the author of The Ransom Drop, a newly-released novel about maritime kidnapping and ransom delivery. It may be found on Amazon here. 

 

Offshore Floating Solar Technology Receives World’s First Class AiP

One of the pilot project solar units (SolarDuck)

PUBLISHED AUG 24, 2021 7:29 PM BY THE MARITIME EXECUTIVE

 

For the first time, a floating offshore solar technology has received an Approval in Principle (AiP) from one of the leading classification societies. According to Bureau Veritas which issued the approval to Dutch renewable energy company SolarDuck, this marks the beginning of a new era for this form of renewable energy.

Launched in April, SolarDuck’s first pilot known as King Eider consists of four triangular-shaped units, which are mounted by 156 solar panels and deliver a combined electrical output of 64 kWp to the grid. The structure holds the solar panels approximately 10 feet above water level. The platform is designed to handle coastal sea conditions and hurricane-force winds. It is also optimized for offshore sites in estuaries, natural harbors, as well as near-shore sites.

Bureau Veritas was involved in the project from the design stage. The AiP covers the design methodology of the unit’s structure and validates the relevant parts using standards for marine renewable energy technologies and offshore wind turbines.

“Building on our experience in the marine and offshore market, we supported SolarDuck throughout this innovative journey by assessing risk, analyzing regulations, and improving the overall structure performance and mooring safety,” said Paul Shrieve, Vice President Offshore & Services at Bureau Veritas Marine & Offshore. “We are proud to be part of the venture and to contribute to make this cutting-edge solution reliable.”

Each unit measures nearly 53 feet on each side of the triangle. The pilot units were built by Damen and deployed this spring.

 

 

The project, which was deployed in IJzendoorn, in the Netherlands, was born from the ambitions of a group of maritime and energy engineers, who founded SolarDuck to play an active role in getting the world to net zero. Upon realizing that solar energy is an inexpensive and efficient form of renewable energy for many cities, islands, and regions around the globe, but inaccessible to many of these regions due to land scarcity constraints, the team initiated the project to make solar panels float offshore.

According to the team at SolarDuck, water-based solar applications will yield higher energy outputs with lower costs and efforts required for installation. They expect to combine the broad availability of the coastline versus onshore locations with benefits ranging from shorter transmission lines and fewer maintenance requirements which results in less space required per MW installed.

Protecting the Ozone Layer Also 

Protects Earth’s Ability to Sequester 

Carbon

Previous “world-avoided” experiments have shown that, without the Montreal Protocol, ozone levels would be depleted globally by the mid-twentieth century.

Credits: NASA/Goddard Space Flight Center Scientific Visualization Studio

Protecting the ozone layer also protects Earth’s vegetation and has prevented the planet from an additional 0.85 degrees Celsius of warming, according to new research from Lancaster University, NASA, and others. This new study in Nature demonstrates that by protecting the ozone layer, which blocks harmful ultraviolet (UV) radiation, the Montreal Protocol regulating ozone-depleting substances also protects plants – and their ability to pull carbon from the atmosphere. The impact from plants has not been accounted for in previous climate change research.

“We know the ozone layer is connected to climate. We know greenhouse gases affect the ozone layer. But what we’ve never done before this is connect the ozone layer to the terrestrial carbon cycle,” said lead author Paul Young, an atmospheric and climate scientist at Lancaster University in the United Kingdom.

The ozone layer in the upper atmosphere, or stratosphere, blocks UV radiation that can damage living tissue, including plants. The ozone “hole,” discovered in 1985, is the result of humans emitting chlorofluorocarbons (CFCs), which are ozone-depleting chemicals and greenhouse gases that were once commonly used as coolants in refrigerators and in aerosols like hairspray. They were then phased out of use by the Montreal Protocol signed in 1987 and its subsequent amendments.

Scientists have previously simulated the world that we avoided by banning CFCs. Now, the new study returns to the same question – what would happen if CFCs continued to be emitted? – and looked at the effect on plants.

“Past world-avoided experiments have never considered the impacts of increased UV radiation on plants, and what that would mean for the plants’ ability to sequester carbon,” said Young.

Nearly 200 countries came together to sign the Montreal Protocol in 1987, which limited CFC emissions. The production of CFCs was eventually phased out, and the ozone layer is recovering as a result.

Credits: NASA's Goddard Space Flight Center/Katy Mersmann

Please download more visuals at NASA's Scientific Visualization Studio

The team used a series of models to gain a more complete picture and simulate two hypothetical scenarios: the world projected and the world avoided. “The world projected is similar to the path we’re currently on,” said Luke Oman, a research physical scientist focusing on atmospheric chemistry and dynamics at NASA’s Goddard Space Flight Center in Greenbelt, Maryland. “The world avoided represents a path not taken.”

For the world-avoided scenario, the researchers assumed that CFC emissions would increase at the same rate, 3% every year, from the 1970s onward. The models show that there would be a huge thinning of the ozone layer across the globe by 2050. By 2100, ozone holes forming in the tropics would be worse than what has been observed in the Antarctic ozone hole.

In their models of the world-avoided, a depleted ozone layer would let more harmful ultraviolet (UV) radiation reach the surface, inhibiting plants from storing carbon in their tissue and in the soil. As a result, atmospheric CO2 levels are estimated to be 30% higher than they would likely be under Earth’s current trajectory. Consequently, Earth would likely be an additional 0.85°C hotter in that “world-avoided” scenario solely because of the impact on plants. 

This global thinning of the ozone layer would allow significantly more harmful UV radiation from the sun to reach the surface, which would effectively sunburn the plants on Earth, said Young. Earth’s trees and vegetation would be much less efficient at photosynthesis, hindering their ability to absorb carbon out of the atmosphere and sequester it, storing carbon in plant tissue and the soil for many years. Overall, the damage to plants would result in 580 billion metric tons less carbon stored in forests, soil and vegetation. It would instead be released into the atmosphere, increasing atmospheric CO2 levels by 30% on average compared to the world projected scenario.

That huge increase in atmospheric CO2 alone would cause global temperatures to rise 0.85°C by 2100, according to the models. That’s on top of the warming Earth may experience due to prior and expected emissions of CO2 and other greenhouse gases, as well as the 1.7°C of direct warming due to increased CFC emissions in this scenario. 

But how do we know this “world-avoided” scenario is anything like the world that would come to be without the Montreal Protocol? The team checked their models against historical data collected by NASA satellites and other available data from NASA’s partners. For example, they looked at ozone levels recorded by the Ozone Monitoring Instrument (OMI) aboard NASA’s Aura satellite and compared them to what the models ‘predicted’ would have happened. What happened in the model was very close to what actually happened in the past, giving the scientists confidence that their model could accurately project what may happen in the future.

By Sofie Bates

NASA's Earth Science News Team

Last Updated: Aug 26, 2021

Editor: Sofie Bates

 

New Satellite Imaging Detects the "Milky Seas" of Maritime Lore

Bioluminescent bacteria (like the sample in a lab culture above) occasionally cause hundreds of square miles of the ocean's surface to glow

PUBLISHED AUG 26, 2021 11:48 PM BY THE MARITIME EXECUTIVE

 

“The whole appearance of the ocean was like a plain covered with snow. There was scarce a cloud in the heavens, yet the sky . . . appeared as black as if a storm was raging. The scene was one of awful grandeur, the sea having turned to phosphorus, and the heavens being hung in blackness, and the stars going out, seemed to indicate that all nature was preparing for that last grand conflagration which we are taught to believe is to annihilate this material world.” – Capt. Kingman of the American clipper ship Shooting Star off Java, Indonesia, 1854

For centuries, sailors have been reporting strange encounters like the one above. These events are called milky seas. They are a rare nocturnal phenomenon in which the ocean’s surface emits a steady bright glow. They can cover thousands of square miles and, thanks to the colorful accounts of 19th-century mariners like Capt. Kingman, milky seas are a well-known part of maritime folklore. But because of their remote and elusive nature, they are extremely difficult to study and so remain more a part of that folklore than of science.

I’m a professor of atmospheric science specializing in satellites used to study Earth. Via a stat-of-the-art generation of satellites, my colleagues and I have developed a new way to detect milky seas. Using this technique, we aim to learn about these luminous waters remotely and guide research vessels to them so that we can begin to reconcile the surreal tales with scientific understanding.

The bioluminescence in milky seas is caused by a type of bacteria. Steve. H. D. Haddock/MBARI, CC BY-ND

Sailors’ tales

To date, only one research vessel has ever encountered a milky sea. That crew collected samples and found a strain of luminous bacteria called Vibrio harveyi colonizing algae at the water’s surface.

Unlike bioluminescence that happens close to shore, where small organisms called dinoflagellates flash brilliantly when disturbed, luminous bacteria work in an entirely different way. Once their population gets large enough – about 100 million individual cells per milliliter of water – a sort of internal biological switch is flipped and they all start glowing steadily.

Luminous bacteria cause the particles they colonize to glow. Researchers think the purpose of this glow could be to attract fish that eat them. These bacteria thrive in the guts of fishes, so when their populations get too big for their main food supply, a fish’s stomach makes a great second option. In fact, if you go into a refrigerated fish locker and turn off the light, you may notice that some fish emit a greenish-blue glow – this is bacterial light.

Now imagine if a gargantuan number of bacteria, spread across a huge area of open ocean, all started glowing simultaneously. That makes a milky sea.

While biologists know a lot about these bacteria, what causes these massive displays remains a mystery. If bacteria growing on algae were the main cause of milky seas, they’d be happening all over the place, all the time. Yet, per surface reports, only about two or three milky seas occur per year worldwide, mostly in the waters of the northwest Indian Ocean and off the coast of Indonesia.

Researchers found a milky sea event off the coast of Somalia, seen here as a pale swoosh in the top left image. The other panels show sea surface temperature, ocean currents and chlorophyll. Steven D. Miller/NOAA

Satellite solutions

If scientists want to learn more about milky seas, they need to get to one while it’s happening. Trouble is, milky seas are so elusive that it has been almost impossible to sample them. This is where my research comes into play.

Satellites offer a practical way to monitor the vast oceans, but it takes a special instrument able to detect light around 100 million times fainter than daylight. My colleagues and I first explored the potential of satellites in 2004 when we used U.S. defense satellite imagery to confirm a milky sea that a British merchant vessel, the SS Lima, reported in 1995. But the images from these satellites were very noisy, and there was no way we could use them as a search tool.

We had to wait for a better instrument – the Day/Night Band – planned for the National Oceanic and Atmospheric Administration’s new constellation of satellites. The new sensor went live in late 2011, but our hopes were initially dashed when we realized the Day/Night Band’s high sensitivity also detected light emitted by air molecules. It took years of studying Day/Night Band imagery to be able to interpret what we were seeing.

Finally, on a clear moonless night in early 2018, an odd swoosh-shaped feature appeared in the Day/Night Band imagery offshore Somalia (above). We compared it with images from the nights before and after. While the clouds and airglow features changed, the swoosh remained. We had found a milky sea! And now we knew how to look for them.

This milky sea off the coast of Java was the size of Kentucky and lasted for more than a month. Steven D. Miller/NOAA

The “aha!” moment that unveiled the full potential of the Day/Night Band came in 2019. I was browsing the imagery looking for clouds masquerading as milky seas when I stumbled upon an astounding event south of the island of Java. I was looking at an enormous swirl of glowing ocean that spanned over 40,000 square miles (100,000 square km) – roughly the size of Kentucky. The imagery from the new sensors provided a level of detail and clarity that I hadn’t imagined possible. I watched in amazement as the glow slowly drifted and morphed with the ocean currents.

We learned a lot from this watershed case: how milky seas are related to sea surface temperature, biomass and the currents – important clues to understanding their formation. As for the estimated number of bacteria involved? Approximately 100 billion trillion cells – nearly the total estimated number of stars in the observable universe!

The two images on the left were taken with older satellite technology while the images on the right show the high-definition imagery produced by the Day/Night Band sensor. Steven D. Miller/NOAA

The future is bright

Compared with the old technology, viewing Day/Night Band imagery is like putting on glasses for the first time. My colleagues and I have analyzed thousands of images taken since 2013, and we’ve uncovered 12 milky seas so far. Most happened in the very same waters where mariners have been reporting them for centuries.

Perhaps the most practical revelation is how long a milky sea can last. While some last only a few days, the one near Java carried on for over a month. That means that there is a chance to deploy research craft to these remote events while they are happening. That would allow scientists to measure them in ways that reveal their full composition, how they form, why they’re so rare and what their ecological significance is in nature.

If, like Capt. Kingman, I ever do find myself standing on a ship’s deck, casting a shadow toward the heavens, I’m diving in!

Steven D. Miller is a Professor of Atmospheric Science and the Director of the Cooperative Institute for Research in the Atmosphere at Colorado State University.

This article appears courtesy of The Conversation and may be found in its original form here.

MOUNTAINEERING: NEVER LOOKING DOWN
Madeeha Syed

Published August 22, 2021

Naila Kiani with Ali Raza Sadpara and Sirbaz Khan at the summit of G2

In 2018, a video went viral on social media showing a woman in a wedding jorra in front of the mighty K2, deep in the mountains of Gilgit Baltistan, surrounded by porters singing wedding songs. That woman was Naila Kiani. And this was her first major trek.

Fast forward three years, and Naila is now the first Pakistani woman to summit an 8,000m peak in Pakistan — Gasherbrum II (8,035m). She did her summit along with Sirbaz Khan, for whom it was his eighth 8,000m peak, and Ali Raza Sadpara, a local legend who has now officially climbed 8,000m peaks a whopping 16 times — more than any Pakistani living or deceased.

“A year after that [K2 base camp trek], I started thinking seriously about climbing,” she says to me over the phone. Naila has been anxiously hoping to get a successful flight back to Dubai, where she is currently based.

Naila is an avid sportsperson — she is a trained boxer, rock climber and runs for fun. But her transition into a big mountain climber happened rather quickly and against all expectations.

“I researched for two years,” she says about her obsession with mountains and mountaineering. “I was training but … then I got pregnant. It was okay, it was the Covid-19 year. Nothing much happened. I rested for two months after my delivery and then trained for four months.” And then it was time to go. Just like that.

Naila Kiani has become the first Pakistani woman to summit an 8,000m mountain in Pakistan. Incredibly, this was the first big mountain she’s ever climbed. She shares her experience with Eos

Right after having a baby, I ask incredulously. “Yes,” laughs Naila. “My daughter was six months old when I left for base camp and 7.5 months old when I summited Gasherbrum II.”

But the shocks don’t end there. Most mountaineers spend their time conquering smaller peaks before attempting the biggest ones but, according to Naila, “This is the first mountain I ever climbed.”

What made her so confident she could summit an 8,000er in her first attempt at mountaineering? “I did the Gondogoro La Pass [en route the return from the K2 base camp trek] which was at an altitude of 5,850m. I can sense how my body is doing and my body worked well near 6,000m.”

So, understandably, she first decided to aim for a 7,000m peak. But the time it took to summit a 7,000m peak was the same as an 8,000m one — four to six weeks. Plus, it was only 1,000m more. But that’s a thousand metres into the death zone (when the air has such less oxygen your cells literally start dying) I remind her. “That’s the biggest challenge I can give myself!” she laughs.

Although she was training for an 8,000m peak, Naila didn’t really believe she would summit. “I was only thinking of pushing myself as far as I could go,” she says. “Mentally, I knew I wouldn’t give up quickly because in boxing I wouldn’t give up. I lost badly in one of the fights, but I didn’t give up and kept going until the last round. I knew that about myself. I would give it my all until the end. So, I knew I’m mentally strong from boxing. I was conditioning myself physically.”

Naila Kiani in front of K2 in 2018 | Instagram

HOW MANY MOUNTANEERS HAVE DANCED FOR K2; THE GODDESS

Normally, when trying to pick an ‘easy’ (still incredibly difficult to do) 8,000m peak in Pakistan, mountaineers opt for Broak Peak (8,047m). Why did she go for Gasherbrum II (G2)?

“[Because] Sirbaz [Khan] was doing G2,” she says. “I’m not a professional mountaineer, and I didn’t know what the other teams would be like. So, I decided to go with someone I knew. Sirbaz had a great team with him.”

Having the right team helped; Sirbaz would have more than his share of work cut out for him on Gasherbrum II. “The ropes hadn’t been fixed on G2,” relates Naila. “Normally Nepali Sherpas [along with local guides] fix the ropes on the mountains for expeditions. But we didn’t have any on G2. So, Sirbaz Khan and Ali Raza Sadpara were fixing the ropes as well.”

Smiling summit photos hide the insurmountable effort it takes just to reach the top and return safely. You’re pushed to your very limits — physically and emotionally — and on a hostile terrain, where you’re constantly at risk of dying. “The longest day was the summit day,” relates Naila. “[We climbed for] 17 hours.”

At very high altitudes, because of the thin air and low oxygen, it’s hard to eat and it’s even harder to sleep. When the time came for their summit push, Naila and the team hadn’t slept or eaten properly for three days.

“We only had three hours to sleep, but couldn’t,” she says. “We left at 2am and it took us 17 hours to go from Camp 3 to the summit and back. The next day, getting down from Camp 3 was also very exhausting. We were almost dead when we got to the base camp.”

As a first-time mountaineer, Naila observed first-hand how the altitude affected other climbers. “After around 8,000m, the death zone starts,” she says, “There wasn’t much distance [35m] left. But I saw the other climbers. Some were crawling. Others gave up 100m before the summit. I couldn’t understand that, they were so close.”

Their summit was also with added risk: there were no fixed ropes after approximately 7,536m. “It was my first summit, so I didn’t know this was not normal,” says Naila. “We had to use safety ropes strapped to each other, and we had to move very fast. This was very risky. If one fell, the others would too… it wasn’t easy.

“A lot of other climbers were shocked. This never happened in Nepal [where the ropes are fixed all the way to the summit]. Our team fixed most of the ropes. And the foreigners didn’t help much. Sirbaz said he felt this was harder than Everest. Because [in addition to climbing] he had to fix the ropes for everyone else.”

At the summit, Naila was faced with incredible views only a chosen few get to see — high above the clouds, in one of the 14 highest spots on Earth, being able to see both China and India. “I was very light-headed,” Naila says. “How did this happen? I’m the most inexperienced person here. I couldn’t believe that I could’ve reached the top. It felt like a dream.”

That high was not unadulterated, however. “I was so exhausted. I didn’t actually enjoy it. Plus, it was too windy. The team was very uncomfortable. We wanted to get down very quickly.”

While she was summiting G2, there were at least five other women from Pakistan attempting other 8,000m peaks at the same time. They were not successful. When Naila finally got to base camp, she found out that she’d set a record: she had become the first Pakistani woman to summit an 8,000m mountain in Pakistan.

“I never even thought of making a record or anything,” she says. “I don’t really care about that. I just wanted to test my body.”

And what does she have planned for the future? “When I left for this expedition, I thought I’d try to climb one 8,000m and then dekha jaey ga [we’ll see],” says Naila. “I definitely wasn’t thinking I would go for another peak, but now I am!”

Here’s wishing her luck in conquering more peaks and beyond.

The writer is a member of staff She tweets @madeehasyed

Published in Dawn, EOS, August 22nd, 2021

DAWN.COM PAKISTAN
Disappearing ecosystems
Editorial

Published August 28, 2021 - 

AFTER the UN sounded “code red for humanity” with the launch of the Intergovernmental Panel on Climate Change report earlier this month, research has emerged indicating more of the same and revealing further details of the shocking extent of damage caused to the delicate balance of nature. US-based scientists have published the findings of their research in the Nature Scientific Reports, declaring that if carbon emissions continued to be released into the atmosphere at the same rate, it would annihilate up to 95pc of the earth’s ocean surface by 2100. This means that over 70pc of the earth’s surface, which is covered with water, would undergo permanent damaging changes in less than 80 years. The surface climate of oceans would be destroyed with the absorption of a poisonous concentration of carbon dioxide from the atmosphere. That would irreparably change the water acidity levels, surface water temperature and concentration of the mineral aragonite (used by many marine animals to form shells and bone). According to the article, the seas have already absorbed up to a third of the world’s carbon emissions since the Industrial Revolution. However, the accelerated pace with which CO2 was still being released into the atmosphere would mean a death sentence for most of the species that live on the surface of oceans. A living example of these alarming findings is Australia’s Great Barrier Reef, where rising sea temperatures have bleached and destroyed more than half the wondrous corals since 1995. The Great Barrier Reef stretches over 2,300 kilometres and has been a World Heritage Site since 1981 due to its scientific importance.

The UN’s IPCC report also contained similar dire warnings, and urged immediate collective action to arrest the accelerated pace of global warming and keep catastrophic climate events at bay. The unprecedented and large-scale forest fires that recently wreaked havoc in a number of European and Mediterranean regions are an example of what calamities lie ahead. The world needs to wake up and change its ruinous ways.

Published in Dawn, August 28th, 2021

PAKISTAN
Power sector blamed for challenges faced by LNG supply chain

The Newspaper's Staff Reporter
Published August 26, 2021 -

Senators expressed concern over mismanagement of LNG imports, particularly those from the spot market. — APP/File


ISLAMABAD: The petroleum division on Wednesday blamed the power sector for most of the challenges faced by the liquefied natural gas (LNG) supply chain and said the Frontier Works Organisation (FWO) had given monopoly through 10 fuel stations on the motorway to troubled Hascol as subsidiary.

Testifying before the Senate Standing Committee on Petroleum and Natural Resources, Petroleum Secretary Dr Arshad Mahmood said there was a dry-out situation on M-2 (Lahore-Islamabad Motorway) on the eve of Eidul Azha and the petroleum division had been trying to ensure that these remained wet. He said there were 10 fuel stations on the motorway – five each on either side – that the FWO had given to Hascol as kind of a subsidiary.

Presided over by Abdul Qadir, who as an independent candidate had defeated a PTI nominee to become a senator from Balochistan, then joined the Pakistan Tehreek-i-Insaf and became chairman of Senate committee, said the petroleum division was not taking timely decisions. He said the government should take timely decisions on LNG imports to protect consumers from unnecessary burden. He said the government should facilitate the private sector instead of monopolising the LNG business.

The petroleum secretary said he had personally taken up the mater with the FWO management to have a strategy so that these fuel stations remain well served. He said it would be inappropriate to disclose details, but two major parties were in line for acquisition of Hascol at current depressed share price.

Senate panel criticises petroleum division for not taking timely decisions

One of the two parties was really sound and interested in taking over major shareholding after financial restructuring of the second largest private oil marketing company by market share. The company has 611 fuel stations across the country, besides other major strategic installations.

A senator pointed out that it appeared to be a well-planned move by the main shareholders of Hascol, accusing them of playing with fraudulent purchase orders. He cited recent disclosures by the Securities and Exchange Commission of Pakistan that the company kept on restating its financial results.

He pointed out that even the new major shareholders — Vitol — with 40pc stake was planning to have a major initial public offering in the United Kingdom and wanted to dump Hascol and run away because it did not want its bad liabilities on Vitol balance sheet. The senators advised that they should not be allowed to escape, instead operations should normalise and share price improve so that local shareholders could at least have some recovery for the share whose value had crashed from Rs380 to just Rs8 in a short period.

In reply to a question, Chairman of the Oil and Gas Regulatory Authority, Masroor Khan, said the Ogra’s concern was that shareholders’ interest remains protected, but more importantly the consumers should not suffer because of any dry-out situation. He said the regulator had engaged with the company to fulfill its licence responsibilities to not only keep its 611 fuel stations wet but also to ensure 20 days of product coverage.

The senators expressed concern over mismanagement of LNG imports, particularly those from the spot market, resulting in a burden on consumers of not only electricity but also the consumers of CNG as it had become more expensive than petrol.

Petroleum Secretary Dr Arshad Mahmood told the committee that the government could still have about 250 mmcfd of additional LNG processing capacity from existing terminal operators, but because of the fear of investigations, the executives of gas companies were reluctant to take contract additional capacity.

He informed the committee the petroleum division was also engaged with various institutions and would seek parliamentary support to address the challenge of ‘bureaucratic hesitation’ by raising the bar to higher forums, like cabinet bodies, for approval processes. He said there was nothing illegal in benefiting from additional capacity and that too when it has to bring down processing tariff, but one should be appreciative of those who may have spent time in jails earlier in similar situations.

He told the committee that while petroleum sector companies — PSO, PLL, SSGCL and SNGPL — were bound by international commercial contracts in LNG imports, their customers — the power sector companies — had not only payment problems but were also not ready to sign similar contracts with gas suppliers.

In the same vein, a senior executive of SNGPL, Jawad Naseem, told the committee that the power division or its entities changed their LNG requirements seven to eight times a year after approval of annual delivery plans prepared on the basis of the power division’s demand.

These changes, he said, had taken place invariably over the past three years on both sides i.e. power division refused to take LNG arranged on its orders or demanded up to 30pc higher intake instead of its earlier demand. While the power sector refused to take responsibility or foot the bill for variation, the SNGPL had to make diversions back and forth to other subsidised consumers or pay penalties

But that was not all, he explained, adding that various government committees or the cabinet take decisions to provide gas to the fertiliser sector on a 10-15 day notice, or on hourly notice to the power sector, because the government could not afford loadshedding in the domestic sector in case of a sudden drop in river flows.

The secretary told the committee that petroleum companies did not have the financial muscle to have spot LNG purchases 5-6 months in advance. He said the government was looking into building underground storage capacity near Badin for LNG to avoid short-term supply and price fluctuations. The project would cost about $1.5bn.

Published in Dawn, August 26th, 2021

PAKISTAN
Long-delayed refining policy

Khaleeq Kiani

Published August 23, 2021

The new refining policy advocates a vertically integrated oil refining and marketing infrastructure in the country to directly support domestic oil and gas exploration and production activities. — AFP/File


Although the oil refining industry in the country is completing a century now, four out of five local refineries are obsolete by international standards while the fifth one is also over two decades old. The refining capacity is about 20 million tonnes per annum. About 60 per cent of the country’s requirements of diesel and over 30pc of petrol are met by local refineries. The rest is imported as refined products.

Also, about 31pc of Pakistan’s energy requirements are met by oil. Despite these lucrative numbers, no new refinery could be set up for more than a decade, according to the petroleum division. Similarly, upgrades of the existing refineries have not kept pace with the latest technology. The announcements about major investments from friendly countries remained on paper.

Being capital intensive, refining requires long term investment based on the country’s policy-cum-political view that has generally been missing. The 1997 petroleum policy provided various incentives and pricing formulas for new refineries but the industry did not find it attractive. An incentive package, based on the consideration of mega refinery investment from Saudi Arabia and UAE, was approved in April 2018 that could not take off with the change in political government.

An upgraded policy was finalised in March this year that could not see the light of the day following the removal of then special assistant to the prime minister Nadeem Babar. The petroleum division has been trying to get formal approval to a new refining policy from the Cabinet Committee on Energy or Economic Coordination Committee of the Cabinet — a case of borderline jurisdiction. The deadlines for fiscal and policy incentives have been extended by one year and in some cases four years.

The new policy advocates a vertically integrated oil refining and marketing infrastructure to support domestic oil and gas exploration and production activities

The new refining policy advocates a vertically integrated oil refining and marketing infrastructure in the country to directly support domestic oil and gas exploration and production activities and value addition through the utilization of local natural resources.

Under the policy, expected to come up for approval this week, all new deep conversion oil refinery projects of a minimum of 100,000 barrels per day refining capacity, as well as infrastructure projects such as single point mooring, single buoy mooring, jetties, subsea and land oil pipelines, oil terminals, petrochemical plants and tank farms, shall be treated as separate projects and to be set up anywhere in the country and start the construction of the project before December 31, 2025, shall be eligible for a 20-year income tax holiday from profits and gains from the date of commissioning. The income tax holiday on this count will be for 10 years to existing projects upgrades to achieve equivalent standards.

All the above projects would also be entitled to exemption from customs duties, surcharges, withholding taxes, any other levies, general sales tax, or any other ad valorem tax on import of any equipment to be installed, or material to be used in the projects without any precondition for certification by the Engineering Development Board. The federal government shall facilitate a similar exemption of provincial and local taxes.

Construction, operations and engineering services performed in Pakistan, whether by local or foreign firms operating in Pakistan, as well as procurement of any local materials, shall remain subject to applicable local taxes, whether provincial or federal. These projects shall be exempt from the application of the Companies Profits (Workers’ Participation) Act 1968 and the Workers’ Welfare Fund Ordinance 1971. The Federal Government shall facilitate a similar exemption of provincial statutes if any.

Temporary imports by contractors/sub-contractors of all machinery, vehicles, plant and equipment, other materials and spares in connection with setting-up, operation, maintenance and repair, which are to be repatriated after completion of the works, shall be exempted from all customs duties, taxes, surcharges and levies on import, and shall be released by the customs authority on the provision of a bond by the importer, for a defined time period of use.

The government will not guarantee product off-take and the refineries would be free to market their products through their own or other marketing companies or export after meeting local needs. However, import of finished products by oil marketing companies (OMCs) shall be limited to only the deficit projected by the government, ensuring the uplifting of locally refined products first.

Locally produced crude shall be allocated to the closest refinery that can handle crude with such specifications. Once allocated, it would not be cancelled if a new refinery comes up closer to the crude source, unless mutually agreed amongst the existing user and new proposed user and the petroleum division. After uplifting of local crude, the refineries shall be free to import crude oil from any source except prohibited countries, with no obligation or guarantee on the part of the Government of Pakistan.

Refineries will be allowed export of surplus petroleum products or products with specifications that do not have local demand under the intimation to the Oil & Gas Regulatory Authority and Petroleum Division. No refinery shall be allowed to market, in Pakistan, petroleum products of inferior quality than those notified by the Petroleum Division from time to time, unless it has a waiver from the government. If it produces products of inferior quality and does not have a waiver to sell them locally, it shall be free to export.

The Product Pricing Formula of refineries shall be based on “True Import Parity Price” to be derived from Arab Gulf Mean Freight Onboard (FOB) spot price, or if not published shall be derived from Singapore Mean FOB price. All other elements including premium, freight, port charges, incidentals, import duties, exchange rate, provincial taxes as applicable and other price adjustments shall be added, as per Pakistan State Oil’s (PSO) actual imports, in the above FOB price to arrive at “True Import Parity Price”.

Additionally, prevalent inland freight of imported crude oil to refineries and provincial duties, levies, cess and taxes (with import duty on crude oil, if any) at the import of crude oil shall be added for refineries. There shall be no import duties and sales tax on import of petroleum crude oil with effect from July 1, 2022, being the main raw material, by refineries themselves. The finished products, however, shall be subject to import duties and sales tax notified by the government from time to time.

There will be no guarantee of the rate of return for existing, or new, refineries provided by the regulator or the Government of Pakistan. The refineries shall be allowed to open and maintain foreign currency accounts and retain a certain portion of export proceeds in foreign currency to meet operational requirements.

There shall be tariff protection in the form of a 10pc import duty on motor gasoline and diesel of all grades as well as imports of any other white product used for fuel for any kind of motor or engine, effective from the date of commission for six years, provided that refinery starts construction of the project before December 31, 2025, ie the protection would now stay until December 31, 2031, instead of June 30, 2026, envisioned by Nadeem Babar.

The policy envisages a shift to complete deregulation of the oil sector, including products and pricing by December 31, 2027, instead of June 30, 2026, targeted in March this year. The principle to be followed for that deregulation will be that all OMCs will be free to set the prices themselves, based on the quality of fuels, the location and other services being provided like High Octane Ron 97 at present. However, the government would set the price for PSO pumps to give protection to consumers.

Published in Dawn, The Business and Finance Weekly, August 23rd, 2021

KEEP IT MOTHBALLED
Criteria for Pakistan Steel revival approved

The Newspaper's Reporter

Published August 28, 2021 -
In this Feb 8, 2016 picture, a man walks past machines at the hot strip mill department of the Pakistan Steel Mills. — Reuters/File

ISLAMABAD: The Board of Privatisation Commission (PC) on Friday approved documents pertaining to the pre-qualification criteria of investors for the revival of Pakistan Steel Mills Corporation (PSMC).

The board meeting, chaired by Minister for Privatisation Mohammadmian Soomro, approved the Request for Statement of Qualification (RSOQ) and Expression of Interest (EOI) documents. In light of the federal cabinet’s decision, PC will invite EOI after filing of scheme arrangement (SOA) by Pakistan Steel Mills with the Securities & Exchange Commission of Pakistan.

Mr Soomro said the PC has come a long way, with a focused objective to revive the largest industrial unit of Pakistan, which could run in its best capacity and contribute to the national economy.

In view of the decision of the cabinet committee, EOI for investors would be invited for the purpose the pre-qualification of investors. The draft document containing eligibility criteria along with basis of disqualification for the potential investors was placed before the PC Board for deliberation and approval.

Country’s largest industrial unit lying non-functional since 2015

According to the approved transaction features approved by the Cabinet Committee on Privatisation (CCoP), the identified core operating assets would be transferred to the new subsidiary owned by PSMC named Steel Corp (Pvt) Ltd, and then the divestment of equity stakes of the subsidiary will be 51 to 74 per cent through bidding process.

The revival of PSM is one of the important objectives of privatisation plan. The mill is not working since 2015 while the government has planned to bring foreign and domestic investors for the revival of the largest industrial corporation of Pakistan. There have been consecutive meetings with the stakeholders and ministries to resolve the issues, a press release issued by the PC following the board meeting said.

The PC Board also recommended the highest bidder – Faisal Town Pvt Ltd – for Service International Hotel (SIH) along with the offered bid which is higher than the reserved price. The letter of acceptance to the successful bidder will be issued after seeking approval of the CCoP and the federal cabinet.

The board was informed that great efforts were made by the financial advisers who reached out maximum potential investors but due to resource mobilisation, liquidity constraints and overall macro-economic outlook in the backdrop of Covid-19 pandemic, the response of the potential bidders appears lacklustre.

The Ministry of Privatisation widely publicised open auction of SIH transactions in all the leading newspapers. Social and electronic media were also used for the wider circulation to make the process open and transparent.

In pursuance of the approval of PC Board, twelve pre-qualified parties for Jinnah Convention Centre have been notified for participating in the future steps of bidding, the commission added.

Published in Dawn, August 28th, 2021

PAKISTAN POSTFORDISM

Local mobile phone production exceeds imports

Kalbe Ali

Published August 27, 2021 -

Out of the 12.27m mobile phones locally manufactured between January and July, only 4.87m were 4G compatible smartphones. — AP/File

ISLAMABAD: The country manufactured 12.27 million mobile phones compared to the imports of 8.29m sets during the first seven months of 2021, data released by the Pakistan Telecomm­unic­ation Authority (PTA) showed on Thursday.

However, 2G compatible sets continue to dominate local manufacturing compared to smartphones production in the country.

Out of the 12.27m mobile phones locally manufactured between January and July, only 4.87m were 4G compatible smartphones, whereas the bulk of 7.4m mobile phones sets were 2G technology.

Responding to a query, a manufacturer said the trend was changing and the ratio between the smartphones and old 2G technology-based sets will narrow in the coming months. “In the year 2020, only 2.06m smartphones were manufactured in Pakistan against 10.98m 2G sets. This year, almost 5m smart phones have already been rolled out and the gap with 2G sets is not too wide,” said Amir Allahwala, the CEO of Tecno.

PTA hails conducive policies for growing production in Pakistan

While the PTA has said that the successful implementation of Device Identification Registration and Blocking System (DIRBS) and conducive government policies including the mobile manufacturing policy has created a favourable environment for mobile device manufacturing in Pakistan.

The PTA said a mobile ecosystem has been implemented in Pakistan by eliminating counterfeit device market providing a level playing field for commercial entities. This has created trust amongst consumers due to the formulation of standardised legal channels for all sorts of device imports, it added.

The authority said the Mobile Device Manufacturing (MDM) Regulations of January 2021 encouraged manufacturers to establish their units in Pakistan.

Till now, 26 companies have been issued MDM authorisation enabling them to manufacture mobile devices in Pakistan. These include renowned brands such as Samsung, Nokia, Oppo, Tecno, Infinix, Vgotel, Q-mobile etc.

Published in Dawn, August 27th, 2021