The Hindu Business Line : Ships without P&I cover to be denied entry into ports

SHIPS calling at Government-owned major ports without a valid wreck removal cover from a member of the international group of Protection & Indemnity (P&I) Club may be denied permission to enter their waters as per rules on wreck removal drafted by the ports.

"The ports have drafted rules on wreck removal which brings an express mandatory obligation on all ports that they should allow only those vessels entry which are covered for wreck removal by a member of the international group of P&I Club," Shipping Ministry officials said.

As per the draft rules on wreck removal, ports have to ensure that no ship enters their waters without a valid P&I entry certificate from an international group club or fixed premium facility approved earlier.

The agents of the ship owner will have to provide the documentation to the port in advance so as to verify the documents. "If any owner is unable to satisfy this requirement, his ship should not be allowed to enter the port," the officials said.

Wreck removal cover is a third party liability cover provided by a P&I Club. The club covers legal liability and the limit of the cover is almost unlimited. "Clubs have always responded to wreck removal situations very positively. It has been observed that the clubs, sometimes, bring in better input than the ports itself in wreck removal," he noted.

The domestic laws, however, are not adequate to fix a legal liability on the ship owner for removal of wreck.

The International Maritime Organisation (IMO) has finalised a convention on wreck removal and India need to take steps to plug the gaps and bring its legislation in line with this convention. The wreck removal convention drafted by the IMO provides for some kind of a mechanism for financial security, which will improve the situation.

Meanwhile, the expert group set up by the Shipping Ministry to study the marine insurance sector does not foresee any change in the practice of placing the P&I insurance requirements of Indian flag ships abroad as such a facility is not available in India.

Given the complex nature of the insurance and the enormity of the risks to be covered, P&I insurance is currently not provided in India. Accordingly, the Government provides approval, from time to time, to ship owners for such insurance to be placed overseas with any one of the 13 P&I Clubs.

" It is envisaged that this practice will need to continue for the foreseeable future until the infrastructure for such a magnitude along with the legal support network required are put in place," the group said.

Though, there is a big outgo of foreign exchange in the placement of P&I insurances abroad, the benefits far outweigh the premium paid. "The shipping industry is a major foreign exchange earner for the economy and the premium is paid from the earnings only. As such, there is no drainage of foreign exchange from the country," a shipping industry official said.

Besides, the services and expertise, which the P&I Clubs provide to the ship owners are of international standards and this enables the industry to be competitive in the international market, he observed.