Shipping min sinks oil PSUs bid to sail free

NEW DELHI: In a bid to enable oil PSUs to charter ships directly, the petroleum ministry has suggested setting up of internal chartering cells in oil PSUs. While the shipping ministry has opposed the concept, preferring to persist with the present system of chartering through Transchart, the petroleum ministry has said that oil PSUs could continue to seek the advice of Transchart as and when required.

A draft Cabinet note to allow BPCL and HPCL to independently charter ships for import and export of crude oil and petroleum products has been prepared by the petroleum ministry. The petroleum ministry aims to create a level playing field for public sector oil companies vis-à-vis private ones through this proposal.

The shipping ministry has not favoured a change in the role of Transchart. “In the ministry’s view, there is a definite role of Transchart in chartering vessels for oil PSUs. It charters vessels at competitive levels and takes prior approval of oil PSUs before doing so,” a shipping ministry official said.

The shipping ministry has shot down the proposal to set up chartering cells on the grounds that it would result in additional expenditure without serving any additional purpose to the oil companies.

The petroleum ministry has refuted the claim, saying that all three companies — IOC, BPCL and HPCL — already have full-fledged shipping departments and the cells will not result in additional expenditure. No additional manpower would be required either, it has said.

The shipping ministry is also of the opinion that with their own chartering systems, the resulting ‘unhealthy’ competition among the PSUs would have an impact on freight levels and the availability of vessels due to multiplicity of demands. However, according to petroleum ministry officials, competition would not increase amongst the PSUs given the difference in their demands. While BPCL and HPCL focus on the west coast for their business, IOC concentrates primarily on the east coast.

IOC has been chartering vessels on its own since 2005. The ministry of petroleum & natural gas has been pushing for permanent direct chartering arrangements for BPCL and HPCL