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Santanu Sanyal

FIRST it was location. Now it is wharfage. The tussle between the Cochin Port Trust (CoPT) and Kochi Refineries Limited (KRL) over the proposed single buoy mooring (SBM) project will never stop. Or so it seems. Fortunately the location issue has been resolved with both the CoPT and KRL zeroing in on Puthuvypeen. The wharfage issue, which continues to be the bone of contention between the two, too is expected to be sorted out soon as a high-level committee going into it is to firm up its views shortly.

Given a choice, KRL, now under Bharat Petroleum Corporation Limited (BPCL), would rather not pay any wharfage. The argument is simple: Where is the scope for wharfage in a SBM? Where is the wharf? After all, SBM is a mooring floating in the high sea far from the port.

However, such an argument, no matter how strong the logic appears to be, does not impress the CoPT. For obvious reasons. After all, the wharfage on KRL's crude traffic is the CoPT's main source of revenue. Crude accounts for nearly 60 per cent of the CoPT's total traffic.

The crude throughput of the refinery is about seven million tonnes per annum — 35-40 per cent of it coming from Bombay High (transported by ship to Kochi from Jawahar Dweep in Mumbai) and the balance imports (from Saudi Arabia, Kuwait, Abu Dhabi, Yemen, Malaysia and Indonesia, both by way of term contracts and spot purchases). At Rs 65 per tonne, it is therefore not difficult to estimate the amount of revenue the port earns by way of wharfage on the crude traffic.

But, then, the CoPT also realises that insistence on the same rate of wharfage for the SBM operation will make little sense. It is, therefore, prepared to reduce the rate instead of doing away with it altogether. Conceding the importance of the wharfage on crude traffic to the CoPT, KRL too does not insist on zero wharfage on SBM; instead, it suggests a lower wharfage. How much lower? As low as possible, observe informed sources. The point of convergence is yet to be reached.

How does then the CoPT cope with the probable revenue loss to be caused by nominal wharfage on crude traffic? The answer: The accent will be on volume growth; also alternative opportunities are being explored. Since the volume of traffic to be handled by the SBM will be much larger (an estimated 10.5 million tonnes), it is pointed out that even at a lower wharfage, the revenue loss will not be as large as made out to be.

Nevertheless, the CoPT is working on an alternative scheme. This presupposes leasing out of the port land to KRL for constructing tankages and receiving the lease rentals. The income from the lease rentals, together with the wharfage on the large volume of traffic and some rationalisation of rates here and there, should take care of the probable revenue loss, it is felt. There will be at least six tankages of 60,000 kilolitres capacity each. These will be needed to store the crude to be unloaded by very large crude carriers or VLCCs (280,000-350,000 DWT capacity) at the proposed SBM. The port authorities, it is learnt, have earmarked about a couple of hundred acres to enable KRL construct the tankages.

A network of 25-km long submersible pipeline will have to be laid to transport the crude to the (proposed) tankages from the VLCCs to be "berthed" at the SBM. The cost of laying the pipeline is estimated at Rs 5 crore per km. When will the SBM be ready for operation? Much will depend on the exact saving in transportation cost to be resulted from the handling of VLCCs in place of present LRI or LRII tankers.

If the saving is substantial, then KRL would try to implement it as early as possible. It may be noted that by April 2005, KRL would have Euro II norms in place within the refinery. Being implemented at a cost of Rs 160 crore, the adoption of Euro norms will enable the refinery upgrade its product quality.

Earlier it was thought that the installation of the SBM would be complete by 2005 to coincide with the adoption of Euro II norms. As the work has not started as yet and since it will take at least 36 months to have the SBM ready, it is doubtful if the facility will be ready for operation by 2005.

Alternatively, one may have to wait till 2008, when Euro III norms are to be adopted, to see the SBM ready.

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