Week ending June 7, 2003

News on Shipping

Cargo support to be extended to all Indian flag vessels : The divestments ministry has stated that cargo support policy for government cargo would be only be extended to Indian flagged vessels, irrespective of ownership of the vessel. The cargo support would however not include oil imports by public sector oil refineries, which has already been de-regulated last year. The SCI until last year had enjoyed official nodal agency status for transporting all crude oil imports into the country. Under the revised policy, the owners of Indian flagged vessels will now have the first right of refusal to match the lowest rate quoted by a foreign owner and secure the transportation contract for government-owned or controlled cargo. The clarification has been incorporated in the Preliminary Information Memorandum (PIM) issued for inviting bids for SCI disinvestments. PIM earlier had a clause stating that "nodal agency" status for oil cargoes of PSU oil companies would be continued for two years following SCI disinvestments. Several private shipping companies had objected to the policy of extending "nodal agency" status to SCI, after it is privatized.

SCI orders for two VLCCs from Hyundai : Shipping Corporation of India (SCI) has entered into contracts with Hyundai Heavy Industries Company Limited, South Korea for building two very large crude carriers (VLCCs), with a dead weight of about 3,00,000 tonne at a design draft of 21.6 meters. The acquisition of these crude carriers, expected by end of February 2005 and mid-October 2005 respectively, will augment the SCI's tanker tonnage. The vessels would be built as per latest and most stringent international regulations including the US Coast Guard rules and OPA 90. The SCI's present fleet consists of 88 vessels aggregating to about 2.66 million GRT (4.57 million dwt ), which includes general cargo vessels, cellular container vessels, crude oil tankers (including combination carriers), acid carriers, passenger vessels and offshore supply vessels (OSVs).

News on Ports

New Visaka box terminal to handle first vessel : The new Visaka container terminal being set up in the outer harbour of Visakapatanam port by Visaka Container Terminal Pvt. Ltd., a joint venture between United Liner Agencies belonging to the JM Baxi Group and Dubai Port Authority (DPA) is expecting to handle the first container vessel by mid-June. The first vessel to call on the new terminal is likely to be placed by American President Line (APL), which has the largest share of the box movement at Vizag port. Full-fledged operations at the newly built container terminal port are however, expected commence only after few more months after all infrastructure facilities at the terminal are set up.

Government aid sought for Vallarpadam : The Union Shipping Ministry has forwarded a proposal to the Planning Commission seeking financial assistance for carrying out dredging works, road and railway connectivity for Rs.2,118 crore Vallarpadam project. The project for which the Cochin Port Trust had invited international tenders is likely to be finalized by June-end, with two of the bidders - CSX World Terminal of Britain and Maersk of AP-Moller group locked in a close race. The construction of the new terminal will entail expenditure of Rs.300 crore. Rail connectivity is expected to cost another Rs.85 crore and a similar amount for setting up road connectivity. The ministry in its proposal has opined that government should extend financial assistance for supportive infrastructure activities under viability gap funding norms, announced by the government in the last budget. The demand for Central-level assistance for implementing a comprehensive development plan in and around the Cochin city has also been made by the Greater Cochin Development Authority (GCDA), which has estimated the investment requirements at Rs.20,000 crores in the wake of Vallarpadam terminal project.

NMDC plans to pick up stake in Dhamra project : The prospects of iron ore handling through Dhamra port have once again brightened with the National Mineral Development Corporation (NMDC) evincing interest in picking up a strategic stake in the Rs. 1,500 crore stalled port project in Orissa. The public sector mining major that operates several of iron ore mines in the Eastern region is reported to be planning to pick up as much as 49 per cent stake in the Dhamra port project, whose fate has been hanging for the past few years. The acquisition of the stake in the project may cost as much as Rs.245 crore on the basis of 2:1 debt to equity ratio proposed for funding the project. The project had earlier suffered a setback after two of its overseas promoters - International Seaports Authority and Stevedoring Services had opted out. With the revival of the project, the port capacity is likely to be further expanded to accommodate another 15 million tonnes from current 10 million tonne cargo capacity.

Poor response to Mumbai port cruise terminal : The proposal of the Mumbai port to develop the Ballard Pier extension as a cruise terminal, for which it had floated international tenders has drawn poor response with none of the major international cruise liners showing interest in the project. Only three domestic companies - JM Baxi's United Liner Agency, Satyagiri Shipping and Aquarius Yacht Club - have submitted their expression of interest (EOIs) in the project. The development of cruise terminal at was proposed with the objective of arresting the decrease in the number of cruise vessels calling at Mumbai port in the past few years. About 34 cruise vessels called at Mumbai port in 2000-01, while the number dropped by 50 per cent to 17 vessels in 2001-02. The number has further dropped to mere six cruise vessels calling during 2002-03.

News on Logistics

Feasibility study on Railway's double-stack container proposal : With an funding offer of $ 300 million from Canadian International Development Agency (CIDA) and Export Development Canada, three of the Canadian firms, in the race for bagging the mandate from railways for taking up the feasibility study have reportedly upstaged domestic contender RITES. The three Canadian firms in the race for taking up feasibility study include CPCS Transcom, Canac and Lea International. The assistance from CIDA will enable the consultants to offer their services virtually free-of-cost to the railways. RITES had earlier done a preliminary study for the railways on the double-stacking container proposal. The feasibility study could generate an export order of at least Rs. 1,000 crore for double-stack containers from Pipavav Railway Corporation (PRC) and Concor.