Ministry Asks Ioc To Defer Coastal Shipping Contracts

The ministry of surface transport has asked Indian Oil Corporation to withhold awarding contracts for coastal transport of petroleum products. This follows a representation by shipping companies. Members of the Indian National Shipping Association (INSA) had argued that companies which have acquired vessels through bareboat charters should be kept out of coastal routes because they fly foreign flags in violation of the Merchant Shipping Act.

However, Amar Shipping and Prathiba Shipping Company have argued with the ministry that they fly foreign flags because their vessels are leased. Once the lease expires, they can fly the national flag on such ships.

Besides, these shipping companies come within the purview of Indian maritime laws and all insurance payments are made to domestic insurance companies. The vessels are also manned by Indians.

Both points of view have been sent to the law ministry. The surface transport ministry has suggested withholding the contracts until the law ministry takes a final decision.

Earlier, the director-general, shipping, had written to Indian Oil Corporation asking it to defer floating tenders. IOC, however, floated tenders last month and closed the bids on October 11.

Bidders for the contracts included shipping companies which had acquired vessels through bareboat charters.

Amar Shipping and Prathiba Shipping submitted bids of $11,000 and $13,000 per day, respectively, as opposed to $15,000 per day being paid to some of the member companies of INSA.

The contract for the coastal shipping expired on June 30, but floating fresh tenders had been deferred till September 30. The original contracts were made on time charter at the rate of $15,000 per day.

However, the delay in floating tenders implies that last year's contracts continue to be operative, resulting in expenditure at the original rate.

Officials said further delay could result in an extension of these contracts despite far more competitive rates available in domestic tonnage.