India’s busiest ports at Kandla in Gujarat and Mumbai are additional clogged with LPG import vessels as the state-owned oil firms refuse to transcend a small listing of ports which have been designated by the federal government to present freight subsidies for bringing within the cooking gasoline from abroad, sources mentioned.
Under the PDS Kerosene and Domestic LPG Subsidy Scheme of 2002, the federal government has categorised ports at Kandla, Mumbai, JNPT, Jamnagar, Hazira, Mangalore, Kochi, Chennai, Haldia and Vizag as ‘Designated Ports’ for giving ocean freight subsidy. This signifies that state-owned oil advertising firms get reimbursed for freight for any cooking gasoline LPG imports achieved by these ports.
This subsidy is just not out there for imports achieved at different ports and so there’s a clamour to get the ships solely at these ports, 4 business sources with direct data of the matter mentioned.
This has led to the piling up of LPG vessels at these handfuls of ports and a better turnaround time.
The sources mentioned this facility of claiming reimbursement of the freight is just not out there on LPG imported in the identical vessel at different ports such as Mundra, Dahej, Pipavav, Porbandar, Tuticorin or Paradip.
To keep away from incurring the upper value of import, OMCs are importing unusually excessive numbers at such designated ports at the price of environment friendly operations, thereby growing the general value of LPG import, they added.
The oil business and the petroleum ministry have made a case for increasing the listing of designated ports, however the finance ministry shot down the proposal.
The finance ministry as a substitute needs your complete subsidy scheme to be scrapped as it has lasted approach past its designated interval.
On April 26, 2021, the ministry wrote to the petroleum ministry, saying “the shortcoming of the OMCs to utilise comparatively free port and terminal infrastructure of non-designated ports is just not justified”.
“The dependency of the OMCs on the reimbursement of the ocean freight at extra ports beneath the subsidy scheme must be phased out as the LPG subsidy scheme has change into focused now and, due to this fact, restricted to a section of shoppers solely,” it had mentioned, including the Rs 1.15 per cylinder freight subsidy must be utterly eliminated as it will guarantee stage enjoying subject to all of the ports.
It went on to state that this value could also be borne by OMCs.
The sources mentioned an in depth evaluation of the imports would present that the imports will not be evenly distributed among the many totally different ports, particularly on the west coast. There are sure ports like Kandla, Jawaharlal Nehru Port Trust (close to Mumbai), Mumbai port and Mangalore the place a number of turnarounds a month are noticed, and the resultant piling up of vessels.
In distinction, few different places in the identical area, the place ocean freight reimbursement is just not out there in any respect, have sporadic imports over the yr.
This motion on the a part of oil advertising firms (OMCs) to concentrate on designated ports simply for getting the ocean freight subsidy ends in the idling of vessels at such ports and lowering the turnaround of vessels. Idling and discount within the turnaround of vessels finally enhance the per tonne value of landed LPG.
This creates inefficiency within the system, they mentioned, including the price of LPG imports may be decreased by vessels being moved to Mundra Port for early launch, as a substitute of 2-3 vessels ready at Kandla.
Similarly, as a substitute of shifting the product north from JNPT through rail loading, it’s less expensive to maneuver the product from Pipavav rail loading.
The sources mentioned OMCs solely go for time period constitution vessels the place a separate accounting of demurrage is just not achieved. The ready and idle time fall on the designated ports are computed beneath freight solely.
This is as a result of if demurrage incurred on account of ready and idle time is proven as a distinct line merchandise (normally relevant for spot constitution or CFR deliveries), the OMCs don’t obtain this reimbursement.
In addition to this, the low cost obtained by OMCs from suppliers on FOB merchandise is just not proven as this will likely have an effect on the freight subsidy they obtain.
“LPG import within the nation has elevated from 865 TMT (thousand metric tonnes) in 2002-03 to virtually 16,000 TMT in 2020-21, which is greater than 18 occasions LPG import progress. Whereas new ports haven’t been added beneath designated ports listing for the reason that declaration of the subsidy scheme,” an business illustration to the oil ministry mentioned.
It mentioned since designated ports’ capability is absolutely saturated and all designated port terminals are working at overstretched capability, OMCs are left with no different possibility however to utilise non-designated ports for assembly the home demand. The business has imported roughly 16.5 million tonnes of LPG in 2020-21 and dealt with about 2 MMT at non-designated ports”.
State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have been disallowed Rs 826.23 crore of ocean freight claims at non-designated ports from 20016-17 to 2020-21, it added.
(Only the headline and movie of this report might have been reworked by the Business Standard employees; the remainder of the content material is auto-generated from a syndicated feed.)
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