Financial Daily from THE HINDU group of publications
Monday, Jun 17, 2002
Essar scraps oil carrier `Nandshivachand'
NEW DELHI, June 16
THE Essar Shipping Ltd-owned 65,000 dead weight tonne (dwt) oil, bulk and ore (OBO) carrier `Nandshivachand', at the centre of a controversy relating to the coastal crude movement contract of Indian Oil Corporation (IOC) has been scrapped.
"Essar has sold the vessel as scrap in the first week of June'', industry sources tracking the first-ever competitively bid contract for coastal transportation of crude for IOC said.
Essar had offered `Nandshivachand' to IOC at a charter hire rate of $12,500 per day, emerging the lowest quoted vessel in the 65,000 to 70,000-dwt category in which IOC required three tankers.
Essar is later understood to have withdrawn the vessel from the tender after informing IOC that it would not be able to offer `Nandshivachand'.
The ageing tanker would have required major repairs in order to be fit for coastal operations.
Interestingly, `Nandshivachand' is believed to have been rejected by even Shipping Corporation of India (SCI) on technical grounds when it was undertaking the coastal crude transportation work for IOC in the administered price mechanism (APM) regime by deploying its own vessels and also by in-chartering vessels from private shipping companies to fulfill the contract.
Taking `Nandshivachand' as the lowest quoted vessel in this range, IOC had asked SCI to match the rate quoted by Essar for the three LR I tankers of 67,000 dwt each it had offered in this category.
While SCI was willing to lower its rate for the three LR I tankers to about $ 14,000 per day per tanker from the initial offer of $15,500 per day per vessel, it said that matching Essar's rate was not possible.
IOC has now decided to hire four vessels on a voyage-to-voyage basis to overcome the shortage of tankers for coastal movement of crude in this category.
Till last year, SCI was undertaking the coastal movement of crude for IOC on negotiated basis, which has been discarded in favour of open competitive bidding with the dismantling of the APM for the oil sector from April 1 this year.
On the basis of the open tendering process, IOC has hired an Aframax tanker of 105,000 dwt `Jag Laxmi' from Great Eastern Shipping Company Ltd (Gesco) at a charter rate of $18,600 per day.
IOC has also hired four crude tankers of 89,000 dwt each in the LR II category from SCI at a rate of around $14,000 per day per vessel, the sources said.
All these vessels have been hired by IOC for a period of 18 months for moving the crude cargo imported from the Persian Gulf on very large crude carriers (VLCCs).
Due to the draft restrictions at Indian ports for bringing in large crude tankers, the crude cargo would have to be evacuated from the VLCCs through lighterage operations by deploying tankers suited for coastal operations.
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