The Hindu Business Line : What the new LNG shipping policy says

THE Cabinet Committee on Economic Affairs (CCEA) has approved a first-of-its kind LNG Shipping Policy that gives importers the flexibility to transport the cargo either on f.o.b. (free-on-board) or c.i.f. (cost-insurance-freight) basis by deploying foreign- or Indian-flag ships.

After considering a note drafted by the Department of Commerce on `Flexibility in transportation of LNG' on November 24, the CCEA agreed that "no restriction should be placed which will entail the import of LNG only on f.o.b. basis." This would provide LNG importers with a wider choice of carriers to ship the cargo.

The Cabinet decision has, thus, reversed the guidelines issued by the Director-General of Shipping in July 2004 which stipulated that licence for chartering LNG tankers into the country will be granted only if the vessels are registered under the Indian flag and owned either wholly by an Indian entity or by an Indian partner owning not less than 26 per cent equity in the joint venture company owning the LNG carrier(s). The D-G's norms had indirectly made it mandatory to buy LNG only on f.o.b. basis. The CCEA, however, did not agree to the Commerce Department's suggestion to keep the D-G Shipping norms on LNG transportation in abeyance for just three years.

According to the minutes of the CCEA meeting, "the position may be reviewed on need basis (but at least once a year before the announcement of the Foreign Trade Policy) by an Inter-Ministerial Committee comprising Secretaries of Commerce, Petroleum and Natural Gas, Power, Shipping as well as the DG (Shipping) which may keep track of the changing market situation and suggest appropriate changes in the policy as and when required... In the case of a difference of opinion, the matter may again be placed before the Cabinet by the Department of Commerce in the shortest possible time."

The Director-General Foreign Trade (DGFT) will act as the Secretary to the Committee.