Reservation for Indian lines to carry crude likely
Mumbai   21-Aug-2010

The shipping ministry is likely to give some reservation to Indian shipping lines to carry crude for public sector oil companies. It would also enable Indian ship owners acquire more vessels.

Shipping secretary K Mohandas, on the sidelines of a cargo shipment conference, said: "It is desirable that in strategic areas like oil we have national flag carrying ships." But there were concerns about cost pressure on the economy, Mohandas added. The Indian National Shipowners Association (INSA), representing 90% of the total Indian tonnage, has recently demanded reservation for carrying crude, imported by PSUs. Firms like IOCL, BPCL, and HPCL import an average of 90 million tonne crude a year and are free to charter any vessel at market rates.

INSA has asked for a reservation on the basis of long term charter arrangement taking floor and ceiling rates as the basis of fixing freight rate. This, they argue, would protect the oil PSUs from freight rate fluctuation. "This is something the shipping ministry is inclined to support," Mohandas said. According to him, if the Indian shipping lines are assured a certain amount of crude cargo, these would acquire oil tankers, enabling growth of the Indian shipping industry. Among the Indian shipping lines, only the Shipping Corporation of India owns oil tankers and competes with foreign shipping lines in the crude carrying business. However, INSA's demand of reservation is in line with the hydrocarbon transportation policy, a draft in the process of being finalised, a shipping ministry official said.