MARITIME NEWSLETTER FOR THE WEEK ENDED DECEMBER 20, 2003

   

JNPT to pre-pay World Bank through bonds issue

After getting an over-subscription for its short term unlisted bond issue of Rs 225 crores, the JNPT is now to issue long term bonds in December last week or January, 2004. The funds, which are being obtained for about 5% interest rate, will be used to pre-pay the Rs 468 crore World Bank loan and thus save on debt servicing costs. The long-term bond, which will be listed have been cleared by Crisil-care with a rating of AAA.

Adani Group to complete Mundra SEZ soon

The Rs 5000 crore Mundra Special Economic Zone will be completed by early next year. Spread over 3,500 hectares it will target textiles, food processing, pharmaceutical, IT, healthcare and light metallurgy and be accessible through the Mundra International Container Terminal and also the 57 km rail link running from Mundra to Adipur. The Kutch district already boosts of another zone- the Kandla SEZ.

SCI to pool in 5% for marine joint venture

Shipping Corporation of India (SCI) will pick up 5% stake in the marine joint venture that is being initiated by Oil & Natural Gas Corporation (ONGC). Overall, various state-owned companies will hold 49% stake and the remaining be held by 51%. The activities of the venture will include servicing the marine requirements of the oil industry.

Great Eastern (GE) Shipping Company to acquire ten new vessels

GE has set aside an expenditure of Rs 1,038 crores to acquire Four anchor handling tug supply vessels, two platform supply vessels, one MR product carrier, two Suezmax and one Aframax in the next three quarters. The move is basically to tap the energy sector that has seen a boom in the recent decades. It is learnt that the funds that were set aside for the acquisition of Shipping Corporation of India, whose divestment has now run into rough weather, is being diverted to these expansion activities.

Freight rates heighten ship acquisition and tonnage

Driven by the impetus provided by unprecedented freight rates various shipping corporations like GE Shipping, SCI and others have lined up for ships. This has favorably affected the tonnages, which, after having declined over the past few years, have shown an increasing trend this year. It is also likely that if the tonnage regime replaces the corporate tax regime the boom will receive a greater impetus as the tonnage regime in other countries has so far led to them having an edge over their Indian counterparts.

IOC granted autonomy to design shipping requirements

In spite of the opposition from the domestic shipping companies the Shipping and Petroleum & Natural Gas Ministers have granted IOC the freedom to choose its shipping arrangements. So far, Transchart, the centralized chartering wing, controlled their shipping but now IOC is expected to move towards C&F arrangements not provided by them. The domestic players operate under FOB method for which IOC has not shown any preference. This is also been seen as a danger on account of other PSUs making similar demands in the future. The move is going to be a major blow for the Indian shippers who depend on oil for their cargo needs.

SCI acquisition programme to get back on track.

After the interlude caused by the derailed privatization process the SCI has hit upon a plan to re-start its acquisition spree. SCI has proposed to do so through Iran-o-Hind (IOH), which is SCIís joint venture with Irisil, an Iran based shipping company. It shall help them to pick up the sagging tonnage of the company.

No respite for Green peace International

After being thrown out of Indian waters during its failed campaign against junk ships in Alang, the Green peace vessel has only been allowed to park themselves at Ferry Wharf to arrange for food for its crew and been told not to leave their vessel and return to their countries. The navy and the customs have not entertained their protest.

Unemployment hits student interest in maritime education

LBS College of Advanced Maritime Studies and Research has seen a drop of 50% in its capacity as unemployment of certified seamen took a tool amongst aspiring seafarers. A similar trend has been observed across other institutes as the shipping industry fails to provide jobs to pass outs.

Notice of sales tax payment served to SCI

After having raided offices to acquire charter hire payment details, the Sales Tax Department has now served a notice to them to pay up the 4% sales tax on the payments they have received from chartering of ships. The sales tax department, perhaps guided by the fact that shipping companies have soared in their income in the recent past, have argued that chartering of a ship is like transfer of right to use the ship and so comes under the provision of tax under the Transfer of Rights to use any Goods for any Purpose Act 1985. The shippers have argued that the owner is still the supervisor even as it serves its clients and that does not amount to transfer of right to use the ship. The implications are immense in terms of the quantum of money the SCI and other companies may have to cough up and also in the precedent it sets for the other states to follow.

TAMP reform expected soon

Tariff Authority for Major Ports (TAMP) has decided to revamp tariff regulations on account of the changed scenario. TAMP, in its present condition, has attract a number of issues from various shipping agencies and it has now resolved to table a revised set of guidelines. The issues to be looked into include general tariff model, cargo charges, container charges, vessel charges, port land policy and other tariff related issues. Discussions have also been held various players at the major ports and reforms have been welcomed by them as per TAMP officials.

Expenditure Reforms Commission (ERC)ís proposal runs into debate

ERC had recommended the establishment of Maritime Authority of India (MAI) to club together the scattered bodies that govern maritime activities. However, apart from the issue of reduced expenses, the issue of having a separate tariff authority-it being a commercial authority. Also, the formation of a new authority will in itself bring expenses that would go against the prime objective of ERC.

Kerala seeks transshipment business of Indian cargo

The Kerala government wants legislation from the Centre to enable the Vizhinjam port so as to gain business of Indian cargoes that is draining forex of about Rs 600 crores every year. Since it is not a major port it need not seek TAMP permission but it will need to get legislation from the union government. So far, 80% of the transshipment is being done at Colombo, Dubai and Singapore.

 

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