Normally, INSA has to verify that there is no Indian tonnage to move the particular cargo. Following pleas from the industry, the DG Shipping is having a re-look at the charter policy, with INSA setting up an expert committee to study the issue.

Amit Mitra

Mumbai, July 3

MERCATOR Lines Ltd's plan to charter nine bulk carriers with a buying option from a Norwegian company may run into rough weather as the company may not get Government clearance under the existing chartering norms.

According to sources, other Indian shipping companies have asked the Directorate General of Shipping to keep the Mercator charter proposal in abeyance till the existing charter policy is re-examined.

As per a memorandum of agreement between Mercator Lines (MLL) and the Norwegian company, Klaveness, the Indian company will charter nine ships of 6.4 lakh DWT (deadweight tonnage) for various periods with Mercator having the option of buying some of these vessels in future.

The company will pay a daily charter of $11,000-11,500 per ship over the next six months till the buy option is exercised.

Sources say, as per the prevailing charter norms, an Indian company can charter foreign-flag vessel only after the cargo is booked. First, the Indian company has to get permission from the DG Shipping, which is given only after the Indian National Shipowners' Association (INSA) clears it.

Normally, INSA has to verify that there is no Indian tonnage to move the particular cargo. Only then it gives the go-ahead for chartering the vessel.

Chartering norms have been made stiff in the country to protect the interests of the domestic industry. Following pleas from the industry, the DG Shipping is having a re-look at the charter policy, with INSA setting up an expert committee to study the issue.

However, MLL is unfazed by this. "This will not come in the way of our acquiring the vessels. If the Indian chartering norms do not permit such time charter, we will shift the vessels to our two foreign subsidiaries," Mr H.K. Mittal, MLL's Chairman and Managing Director, told Business Line.

The company has floated two subsidiaries Mercator Lines Panama and Mercator Lines Singapore.

Shipping sources say it will still be difficult for MLL to bring in the chartered vessels through the foreign subsidiaries.

Apart from these nine bulk carriers, MLL has also contracted two other bulk carriers one super Handymax vessel of 56,000 DWT and a geared Panamax which are expected to join the company's fleet in the next two months. With these vessels, including the nine from Klaveness, MLL's fleet strength will become 22, involving a total of two million DWT.

MLL's focus now is on bulk cargoes. "We see a great demand in the bulk segment, with the booming coal and iron ore imports. While India needs about 150 ships, there are only 30 Indian-flagged vessels of this category available for cross-trading," he said.

(This article was published in the Business Line print edition dated July 4, 2005)
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