The Hindu Business Line : Panel backs IOC move to bypass Transchart

THE high-level Committee of Secretaries (CoS) headed by the Cabinet Secretary, Mr B.K. Chaturvedi, has agreed to allow Indian Oil Corporation (IOC) to make its own shipping/chartering arrangements directly for crude oil imports for a period of one year on a trial basis without going through Transchart, the centralised chartering wing functioning under the Shipping Ministry.

"A decision to this effect was taken at a CoS meeting held on February 18", a senior Petroleum Ministry official told Business Line. The recommendation of the CoS will now be put up to the Cabinet Committee on Economic Affairs (CCEA) for a final approval, he said.

The controversial plan of IOC, piloted through the administrative Ministry of Petroleum and Natural Gas, has met with resistance from both the Union Shipping Minister, Mr T.R. Baalu, and the entire shipping industry for fear of losing critical cargo support for domestic owners.

After considering the proposal at a meeting held on October 27, 2004, the CCEA had directed that the issue should be "examined by the CoS in the first instance" particularly on certain facts that are disputed by the agencies concerned.

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 order of around Rs 200 crore 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 the 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 directly bypassing Transchart.

While the original proposal sought permission to IOC to make its own shipping arrangements "forever", the CoS has now recommended that this should be allowed "on a trial basis for a period of one year".

But, the revised proposal would still have to sail past the opposition mounted by Mr Baalu. "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 in his comments to the Cabinet note.

As per the existing policy, the import of all Government-owned/controlled cargoes on behalf of the 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 tie-up through Transchart.

If Mr Baalu sticks to his stand when the Cabinet takes up the proposal again for consideration, the issue would have to be referred to a Group of Ministers for a final view.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Market not hit by conference lines plan to hike freight rate

Panel backs IOC move to bypass Transchart

Upper class Rly fares fail to cover low-end loss

Online train ticket booking at Tirunelveli

Pre-paid cash cards for online rail ticketing