PACRA Upgrades Entity Ratings of Pakistan National Shipping Corporation

The assigned ratings reflect Pakistan National Shipping Corporation’s (PNSC or the Corporation) strategic significance as the national flag carrier, its strong state ownership, and its essential role in securing Pakistan’s seaborne energy and commodity supply chains. The Corporation operates under a “One Vessel, One Company” structure, reinforcing operational focus and governance discipline. A key development underpinning the strengthened rating outlook is PNSC’s enhanced autonomy in fleet procurement. The Cabinet Committee on SOEs, followed by the Federal Cabinet, approved PNSC’s independent procurement policy under Section 17(2) of the SOE Act, 2023, making PNSC the first SOE to secure such an exemption. This framework streamlines acquisitions, particularly of second-hand vessels, enabling quicker and more efficient decision-making while ensuring adherence to PNSC’s internal SOPs. With the phase-out of older tonnage, the Corporation is well-positioned to implement its fleet expansion and modernization strategy, leveraging both newbuild and second-hand vessel opportunities to optimize cost, operational efficiency, and long-term value. The recent upgrade of its ratings to AA⁺ reflects confidence in PNSC’s fleet expansion plan, the strong governance framework, the experience of the management team in guiding the Corporation to its current scale, and its robust equity base, all of which are expected to enhance operational capacity and long-term sustainability. Industry conditions during FY25 presented a mixed but manageable operating environment: the Baltic Dry Index averaged 1,471 compared to 1,739 in FY24, indicating moderated but stable bulk market activity, while Worldscale rates eased to 6.16 from 6.47 following recalibration of AFRA assessments after earlier regional disruptions. Although AFRA declined more sharply, Worldscale adjustments remained moderate, suggesting a route-specific correction. During FY25, PNSC transported 11.037MT of cargo (FY24: 9.94MT) and posted a consolidated profit of Rs. 20,448mln (FY24: 20,181mln). Operational performance during the year was shaped by vessel disposals, dry-docking schedules, and freight rate fluctuations. Following the divestment of MT Lahore and MT Quetta, both sold upon completion of their useful life, the current fleet now comprises 10 vessels, including five tankers and five bulk carriers. To fulfill ongoing obligations under Contracts of Affreightment (COAs), the Corporation deployed chartered vessels; however, margins on chartered tonnage are materially lower than those of owned vessels, placing downward pressure on overall earnings. The Corporation exudes a veritable financial structure with a high of amount of cash lying on the balance sheet; working capital is effectively managed through internal cash generation. Going forward, the outlook remains constructive as PNSC advances its fleet expansion, including three second-hand tankers by January 2026, all under five years of age, which will be financed through an 80:20 debt–equity structure, and tenders for twelve additional vessels. With agile procurement and improving fleet efficiency, the Corporation aims to boost operations and sustainability, though high capital needs may impact financial metrics.
Ratings will depend on PNSC’s timely execution of its fleet expansion, maintaining a balanced financial profile, and ensuring new vessels generate sustainable revenue. While early-stage profitability may be affected, over the longer term these additions are expected to strengthen the Corporation’s financial and operational profile, improve fleet age, and create new revenue opportunities.

About the Entity
PNSC, majority (89.13%) owned by the Government of Pakistan (GoP) through Ministry of Maritime Affairs, functions as a holding company with 19 wholly owned subsidiaries and an associate. PNSC’s revenue emanates from two sources both from owned and charter vessels; liquid cargo and dry bulk. Dry bulk can further be subdivided into slot charter and bulk cargo. A small proportion of revenue comes from rental income. The Board is chaired by Mr. Sultan A. Chawla, and the Corporation is led by CEO Mr. Syed Jarar Haider Kazmi.