MUMBAI: The number of ships required by state-owned oil marketing companies over the next 15 years have been pruned by half to 59 from the earlier estimated 112 in a small setback to local shipbuilders who were banking on ship orders from oil firms to strengthen their prospects on the back of a ₹69,725 crore package approved by the Cabinet in September.
“During a review meeting taken by Vijay Kumar, Secretary, Ministry of Ports, Shipping and Waterways with the top brass of public sector oil companies in October, the list of vessels required by the oil marketing companies was pruned from 112 to 59.This has been done by reducing the number of so-called Long Range/Medium Range tankers and increasing the number of very large crude carriers, Suezmax and Aframax tankers,” said a government official with knowledge of the decision.
Under the revised plan, the requirement is for two MR tankers, five very large crude carriers, nine Suezmax tankers, four Aframax carriers, two very large ethane carriers, eight very large gas carriers, four LNG carriers, 11 platform supply vessels, ten anchor handling, towage and supply vessels and four offshore supply vessels.
The category of vessels required by the oil companies such as Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd and Oil and Natural Gas Corporation Ltd is double or triple in size of LR/MR tankers and fall in the range of 0.8 lakhs to 3.2 lakhs Deadweight Tons (DWT).
“VLCC, Suezmax, and Aframax vessels have not been previously constructed in India and require a significantly higher level of technological capability, design expertise, skilled manpower, and capital investment. Local shipbuilders have sought the inclusion of these vessel types in the category of specialised ships which will entitle them to receive a higher quantum of aid under the Shipbuilding Financial Assistance scheme approved by the Cabinet,” the government official said. But this demand was not agreeable to the government.
State-run oil companies previously indicated that they required some 112 ships, including 30 Medium Range oil tankers, 24 very large gas carriers and four offshore vessels over the next 10-15 years estimated worth ₹85,400 crores.
India holds a paltry 0.07 per cent share in global shipbuilding as well as a below 1 per cent share in the global shipping tonnage (capacity).
At an event in Gujarat’s Bhavnagar on September 20, Prime Minister Narendra Modi highlighted the importance of India’s shipbuilding and shipping industries by saying that the country pays a whopping ₹6 lakh crore or $75 billion every year to foreign shipping companies as freight, which is almost equivalent to the size of India’s defence budget. This is because hardly 5 per cent of India’s EXIM cargo is carried on Indian ships while the remaining 95 per cent is shipped on foreign ships.
The over dependence on foreign shipping lines comprised India’s national security and strategic independence besides huge outgo of foreign exchange. Thus, removing dependency on foreign carriers for carrying the country’s export-import (EXIM) cargo has become a mission for India’s policy managers.
Under an earlier plan, Indian Oil Corporation was entrusted with the task of floating a tender for buying ten new MR tankers from local yards.
But this tender could not proceed despite a June deadline set by the Prime Minister’s Office in the wake of concerns from local ship owners’ group who said that there were more than 30 MR tankers operating under the Indian flag which was sufficient to cater to the requirements of oil companies.
In view of this, the Indian National Shipowners Association (INSA) urged the government to look at other sectors and segments of oil tankers where the oil companies were facing a shortfall.
Subsequently, it was decided that state-run national carrier Shipping Corporation of India Ltd (SCI) will form a joint venture with public sector oil and gas companies Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) to buy ships from local yards.
The planned joint venture, led by Shipping Corporation, aims to reduce dependence on foreign vessels, enhance India’s energy security, and support Aatmanirbhar Bharat initiative by prioritizing Indian-built ships.
Shipping Corporation will provide technical, operational, and regulatory expertise, while IOCL, BPCL and HPCL will ensure cargo commitment through long-term charter contracts.
A tender to build two MR tankers will be issued by Shipping Corporation on behalf of the JV in the next few days.
