India seen as a prospective bunkering hub

2013-12-16

Had it not been for the high taxation on ship fuel, lack of infrastructure for facilitating bunker supply directly at the berths, poor bunker quality and volumes, India could easily become a bunkering hub. This was the consensus amongst speakers at the 3rd Annual Conference on the ‘Outlook for Bunkering and Marine Lubricants in India’ organized by HINODE in Mumbai last week.

As the only conference of its kind on the sub-continent and held since the past three years, its popularity is clearly seen to be swelling with ever increasing numbers making a point not to miss the event. This year saw various leading stakeholders in the bunkering business getting deeply involved in the discussions putting their heads together to sort out common issues and come up with satisfactory solutions. An amazing feature was the deep seated interactions that continued among some participant late into the night mostly centered on transacting business.

According to Basheer Ahmed Sayeed, CEO of Chemoil Adani Pvt Ltd., reduction in tax and streamlining of customs procedures would greatly facilitate bunkering. Besides, direct supply of bunker to ships from tanks was also necessary to factor in efficiency and speed in delivery.

Kochi port sells around 1.6 million tonnes per annum (mtpa) though officials claim that Kochi has the potential to be one of the world's largest bunkering hubs with present capacity of around 20 mtpa. About 40,000 ships call at Indian ports each year, providing a strong market for fuel sales.

Ashok Sharma, COO of Matrix Bharat avers, “Just a few years back bunkering activity hardly existed in India and refiners banked on exporting their products. Indian refiners are now looking beyond the country’s borders thinking of establishing their footprints overseas. Today, availability of 360 CST and other qualities are no more an issue. India is well on its way to becoming a bunkering hub with Kochi, Mumbai, Mundra and Chennai already having direct delivery facility and almost no tax.

Presenting the shipowner’s perspective B. B. Sinha, Director (P&A) of the Shipping Corporation of India, pointed out that the quality of bunker supplied in India is not up to the mark. Often when the bunker is supplied to a ship, there is the frothing on the top making it difficult to verify the exact quantum supplied. Since the ship has to sail without delay it makes it difficult to ascertain the quantum of bunker supplied.

“Bunkering is the only industry where payment has to be made in advance,” he said. “Besides, the shipowners operating their vessels on the Indian coast pay more for bunkers than foreign going vessels. Unfortunately, the short supply of bunker that take place, poor quality and delays in supply all go to add to the cost of bunker when ship owners are trying their best to reduced freight rates. If in the US, gasoline prices can remain stationary over lengthy periods than why should bunker prices be so volatile in India?”

On the pollution aspect it was informed by Josephine Goh, Area Sales Manager, DNV Petroleum Services Pte Ltd., Singapore that emissions regulations are going to have a major impact on the global petroleum industry in terms for availability and cost of suitable fuels informed. She said, “Ship owners have four main options with respect to SOx emissions rules: Exclusive use of distillate fuels; Mixed use of residual and distillate fuels; Use of residual fuels with exhaust gas SOx abatement technology, Use of alternative fuels / energy sources; NB – No residual fuels could meet the 0.1% sulphur limit, and heavily blended residual fuels could meet the 0.5% sulphur limit.”

Presenting the Ship Owner perspective and their concerns Capt Sanjay Kumar, Essar Shipping Ltd, stated, “Fuel cost represents up to 78 % of voyage / operating cost. Bad fuel can cause engine damage and cause operational problem. Safety / Health hazards (H2S) / Insurance and PNI Club coverage and emission norms were environmental problems. What is required is healthy attitude and a positive approach -- that everyone loses when a wrong fuel is supplied and everyone wins when the bunker fuel quality and quantity meet the requirements.”

When it comes to increasing Indian bunker volumes, Country Head of Glander International Bunkering, Chandan Samaiyar contends that with lot of new facilities coming up at New Mangalore, Tuticorin, Chennai, Ennore, Paradeep and other major ports there would be a transformation. Already most of the ports are also offering barging. “The country may have fallen short of the targeted 250 million tons but once all the bunkering facilities come up India this would exceed 500 million tons in two to three years,” he said. “It is a question of undertaking marketing and sorting out the procedural delays in interstate supply and floating bonded stock. There should be complete exemption of value added tax (VAT) on bonded supply.”

Presenting the Offshore bunkering scenario, Capt. Kapil Dev Bahl, Director of Murray Fenton India highlighted similar issues that are relevant as in the case of providing bunker to foreign going vessels. He stated that common issues included lack of infrastructure, logistics, non-availability of shore tanks and lack of dedicated bunkering facilities for ship / barge. He said, “The tax structure should be treated as deemed export as in the case of ATF”.

R. C. Bhavnani, In-charge of Global Marketing of VISWALAB, Singapore gave three case studies of contaminations in bunker which are not easy to detect. These include fiber like material in the fuel - Polypropylene, Styrene and Mercaptain Sulphur. Problems caused by Catfines and associated issues was explained by David Birwadkar, Vice President of Great Eastern Shipping Co. Ltd. and the detailed account of the Global Marine Lubricants Industry by Milind Phadke.

There was an appeal for setting up an Association for stakeholders involved in the bunkering trade. This could invite membership from among ship owners, suppliers, manufacturers and others. Many have taken this signal in a positive note.

Source from : Maritime Professional

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