Oil PSUs exempted from Atmanirbhar policy for shipping deals below ₹200 cr

State-run oil firms have been allowed to issue global tenders to hire ships for hauling crude and petroleum products with contract value of less than ₹200 crore for two years, in an exemption to the Atmanirbhar Bharat policy introduced last year to boost local firms.

The exemption from issuing tenders only to Indian firms for ship chartering contracts below ₹200 crore was granted in December for a two-year period, multiple government sources said.

The exemption would mean that oil PSUs will continue with the existing practice of floating global tenders to hire ships for moving crude and petroleum products in which Indian shipping companies would get a so-called right of first refusal (RoFR) to take up the contract.

The decision to grant exemption followed intense lobbying by oil PSUs, which argued that strict implementation would pose a risk of not getting ships to transport cargo.

Inadequate tonnage

Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation represented to the government that it was “not possible” to implement the policy as adequate Indian tonnage was not available, forcing the government to “soften its stand on the issue”.

“Ships are not available to cater to the requirements of oil PSUs,” said a government official briefed on the development.

“As far as crude and LPG imports are concerned, you just cannot depend on Indian owners because ships are not available. If a limited tender is issued and after 3-4 days Indian ships are not available and then a global tender has to be floated, that much time is lost. As a result, oil firms lose the opportunity, or may not get a ship at all,” he said.

Oil PSUs said they will be able to avoid dependence on global tenders only when Indian tonnage can fulfil all their requirements. “The government has understood that enough Indian tonnage is not available to implement the Atmanirbhar Bharat policy. Otherwise, it will hamper the government’s interest and the country’s energy security,” he added.

All spot shipping contracts of oil PSUs fall below the ₹200-crore limit set by the government under Atmanirbhar Bharat.

Under the RoFR rules, Indian fleet owners are given a right to match the lowest rate offered by a foreign flag ship in global tenders issued by state-run firms for hiring ships under the chartering guidelines framed by the Directorate-General of Shipping.

Local fleet owners have to come within 20 per cent of the lowest foreign bidder, to get the right of first refusal.