India: Shipping regulator extends helping hand to shipowners.
The Directorate-General of Shipping, Lakshmi Venkatachalam has extended a helping hand to Indian shipowners who are facing financial problems to expand their fleet. She did this by recommending innovative lease agreements and hinting at further fiscal incentives.
However, the attractiveness of the tonnage tax has been offset by the burden of other dozen taxes.
She also said that it is time to look for others things and they are working to modify the framework to see in what way they can improve the tonnage and one option is by way of bare boat charter.
A bare boat charter agreement is nearly the same as a wet lease where a shipowner pays operational costs in installments for a certain period of time after which it owns the vessels capping the huge capital outgo at once.
Meanwhile, the shipping ministry has also set up a panel in order to look into possible changes in the shipping laws which currently permit companies to own only 49% of their entire fleet as chartered.
There are some regulatory constraints but those can be addressed while it certainly is a good mechanism for tonnage acquisition.
Moreover, similar financing leases can work as good model for Indian shipowners, who need Rs 20,000 crore in the next 4-5 years in order to add vessels.
And also for the government to inch closer to its tonnage target of 12 metric tonnes by 2012 from the current 9 million tones.
Previously, it was said that the Shipping Ministry plans to dilute the government''s stake in 3 companies under it namely Cochin Shipyard, Shipping Corp of India (SCI) and Dredging Corp of India (DCI) in the next fiscal (FY11).
They have received a proposal from Cochin Shipyard for an IPO to raise funds for expansion.
This could be through an issue of fresh equity shares of about 10% while there is no proposal yet for selling Government stake through the IPO stated Secretary, Ministry of Shipping, K Mohandas.
In addition, the government has no plans to divest stakes in Shipping Corporation of India (SCI) and Dredging Corp of India (DCI).
As of now, there is no immediate proposal that they are working on and they will have to look at the Corporations'' own needs and the government''s fiscal requirement.
SCI and DCI will manage on their own stated Shipping Secretary K Mohandas.
Moreover, the Union Shipping Ministry would hold talks with stakeholders next week in New Delhi, in a bid to speed up the long pending Ennore-Chennai Port Road Connectivity project.
Officials of CPT, Ennore Port Trust, National Highways Authority (NHAI) and the State government as well as the Shipping Ministry would hold discussions on January 18 in New Delhi.
Moreover, the Shipping Minister GK Vasan stated that as major ports alone require over Rs 36,000 crore private investments by March 2012, the ministry is taking all possible measures to encourage private sector investment in the shipping sector.
He said that the ports could handle an estimated 1 billion tonne traffic by 2011-12 while Rs 36,868 crore private investments is required for the major ports'' capacity addition and the government has introduced greater transparency in bidding system.
However, due to a range of steps taken by the government in 2009 in order to remove blockage, India''''s port and shipping sector seems balanced to sail into good times in 2010.
The shipping turf also witnessed a battle between two leading private shipbuilders to gain control over an offshore drilling firm while the Dubai financial crisis during the end of the year triggered panic among Indian seafarers.
Earlier, powered by iron and coal cargo traffic, the cargo volumes in Indian ports surged 13 per cent to 48.2 million tonnes in November as compared to 42.5 million tonnes reported in the year-ago period.
On month on month basis, the cargo traffic grew 3.4 per cent in November over the previous month. Also, the month of November witnessed the second-highest monthly cargo traffic since April 2008.
Meanwhile, a Shipping Corporation of India (SCI) vessel with 35 crew members on board was attacked by pirates in the Arabian sea, but it managed to escape.
The hijack bid took place last night when the vessel ''Maharaj Agrasen'' was on its way to Vizag from Kuwait.
The incident took place on Monday late night when a group of pirates in three speed-boats attacked the vessel with machine guns and rocket-propelled grenades.
On the other hand, a move is on in order to bar foreign vessels from coastal trade on the domestic waters in the midst of growing security concerns over coastline security.
The Ministry of Shipping has finalized a draft note for a stringent cabotage law to prohibit foreign ships and those manned by foreigners from doing coastal trade in view of the highly sensitive coastline and rising security threats.
The Ministry of Shipping, a branch of the Government of India, is the apex body for formulation and administration of the rules and regulations and laws relating to Shipping. From 2009 this department is under G. K. Vasan.