Financial Daily from THE HINDU group of publications
Friday, Aug 13, 2004
Agri-Biz & Commodities
Oilseeds & Edible Oil
Industry & Economy - Exports & Imports
Logistics - Shipping
Relax norms for tankers, urge vegoil importers Cite IOC's bitumen shipment as precedent
New Delhi , Aug. 12
VEGETABLE oil importers are seeking relaxation on the age norms for chartering of tankers after the maritime regulator recently gave a dispensation to Indian Oil Corporation (IOC) for exporting bitumen to Bangladesh.
The relaxation granted by the maritime regulator to IOC has irked domestic vegetable oil importers who have sought similar dispensation from the age restrictions on tankers, but is yet to get a favourable response.
"If the D-G (Shipping) norms are relaxed to facilitate bitumen exports by IOC and to benefit the Bangladeshi buyer, why not relax it for edible oil imports also to benefit Indian consumers," wonders a prominent palm oil importer. And, bitumen pollution damages the environment in case of a spill/accident, he contended.
The age norms for tankers calling at Indian ports has also jacked up the freight rates for import of palm oil due to restricted availability of ships with resultant scarcity of freight space and is cited as one of the reasons for the drop in its imports since the second half of June this year.
The Director-General of Shipping has recently partially relaxed its age restrictions for tankers calling at Indian ports by granting a "one-time dispensation" to help IOC export 50,000 tonnes of bitumen to Bangladesh on free-on-board (f.o.b) basis after IOC argued that, otherwise, the exports will not go through.
As per the deal, IOC is required to export 50,000 tonnes of bitumen by December from Haldia port to Chittagong and since the cargo is sold on f.o.b basis, the responsibility of making the shipping arrangements is with the Bangladeshi buyer.
Shipping industry sources said the Bangladeshi importer had old bitumen carriers that are not meeting the guidelines prescribed by the maritime regulator with regard to the age norms.
According to the guidelines, the regulator has banned all crude and product tankers (both foreign and Indian flag) that are more than 25 years of age from entering Indian waters from April 1 this year.
Further, all crude and product tankers above 20 years which do not have the mandatory Condition Assessment Programme 2 (CAP 2) rating for hull, machinery and cargo equipment either from a full member of the International Association of Classification Society (IACS) or the Indian Register of Shipping (IRS) has also been banned from entering Indian waters.
The guidelines apply to foreign and Indian flag ships when on international voyages to and from any Indian port, but does not cover gas carriers and dedicated chemical tankers.
But, to facilitate the export contract, IOC had sought and secured a "one-time dispensation" from the maritime regulator to allow the Bangladeshi importer to deploy the older bitumen tonnage for hauling the cargo to Chittagong.
"Basically, the dispensation was given to support IOC and facilitate the export contract even though the cargo is sold on f.o.b basis where IOC has nothing to do with the shipping arrangements," the industry official said.
On the other hand, it has helped the Bangladeshi importer to utilise his old, junk bitumen carriers by getting a relaxation from the age restrictions imposed by the maritime regulator.
Though, the maritime regulator has defined crude and product tankers for the purpose of applying the age norms, it has held that product tankers, even if they carry edible oils will be banned if they do not conform to the guidelines.
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