The Hindu Business Line : IOC plan for own shipping referred to Secys' panel

THE Cabinet Committee on Economic Affairs (CCEA) has last week asked a Committee of Secretaries (CoS) to examine in detail a proposal moved by Indian Oil Corporation (IOC) to make its own shipping arrangements directly for crude oil imports bypassing the centralised chartering wing - Transchart — functioning under the Shipping Ministry.

The proposal piloted by the Ministry of Petroleum & Natural Gas was considered by the CCEA at its last meeting held on October 27 during which the Prime Minister, Dr Manmohan Singh, is understood to have suggested that the plan should be scrutinised first by a committee under the Cabinet Secretary, particularly on certain facts that are disputed by agencies concerned, a top Government official said.

"The Cabinet considered the proposal submitted by the Petroleum Ministry and directed that the issue may be examined by a Committee of Secretaries in the first instance," says the minutes of the CCEA meeting.

The Shipping Ministry had submitted that finalising vessels through Transchart had resulted in savings on freight bill to the oil industry with IOC alone benefiting to the tune of Rs 200 crore (approximately) during the last three years. IOC, which incurs a freight bill of close to Rs 2,000 crore annually while importing 35 million tonnes of crude, has contested this point made by the Shipping Ministry.

The Petroleum Ministry had sought Cabinet nod to amend the existing policy on chartering of ships for imports by PSUs by allowing the largest crude oil importer - IOC- to charter ships for oil imports directly instead of going through Transchart.

But, the Union Shipping Minister, Mr T.R. Baalu, had opposed the proposal. "There is no need to make any changes in the policy and the existing system should continue for making shipping arrangements through the chartering wing of the Ministry of Shipping as long as IOC is a PSU, which will be in the overall interest of the Government," Mr Baalu had said.

As per the existing policy, the import of all Government-owned/controlled cargoes on behalf of Central Government Departments/ State Government Departments and PSUs under them are to be finalised only on free-on-board (f.o.b)/ free-alongside-ship (f.a.s) basis with the shipping arrangements done through Transchart.

Meanwhile, the man who was widely tipped to head IOC's shipping division on securing Cabinet approval to make its own chartering arrangements has bid adieu to the company. Mr V.K. Chawla, Executive Director, Shipping, recently quit the company by taking up VRS. "While agreeing to Mr Chawla's request to opt for VRS, the company has, however, refrained him from joining any entity in the oil sector whether public or private," a company official revealed.

The CCEA will consider the proposal again on the basis of the recommendations made by the CoS and if the differences persists, the issue is expected to be referred to a Group of Ministers (GoM) for a final view, Government sources said.