Coastal shipping operations along India’s eastern coast will come to a
halt this week due to lack of availability of low sulphur fuel oil- which ships
are mandated to use as per a new global rule IMO 2020
that came into force from January 1 to cut emissions.
The new rule means that the global limit for sulphur in fuel oil used
on board ships has been reduced to 0.5 per cent m/m (mass by mass) from the
earlier 3.5 per cent.
Ship fuel or bunkers account for as much as 40 per cent of the
operating cost of a vessel.
“There is virtually no supply of low sulphur fuel oil and all the
coastal ships including the feeder container vessels plying between Indian
ports on the east coast will come to a standstill from this week as soon as
they exhaust whatever little stock they had,” according to a top executive with a shipping
The looming crisis was discussed at a meeting called by the Government
with ship owners, PSU oil refiners and the Director General of shipping on
Situation on the West coast is relatively
Bunker suppliers say that east coast require about 30,000 tons of low
sulphur fuel oil a month to meet the requirement of coastal ships plying on
local routes. The situation on the West coast is relatively better due to the
availability of the fuel in Kandla and Cochin for most coastal ships.
And for the unsettling crisis, oil refiners have been blamed for
having started production of low sulphur fuel oil late.
Refiners’ prioritization also has pushed
back the coastal ships for bunkering
A bunker supplier said: “They
should have been ready with the product in adequate quantities by December 1 to
meet the demand. The first lot of the product were sold by refiners such as
Indian Oil Corporation and Hindustan Petroleum Corporation in the open market
and then when the DG Shipping pushed them to supply to coastal ships, they made
some priority rules that gave first preference to supply to ships they have
chartered to transport their own crude and petroleum products, followed by
coastal vessels/Indian flag ships and then to other vessels. This
prioritisation should have been done prior to start of sales.”
“Whatever they produced is
finished and virtually there is no supply and they want us to operate vessels.
I don’t know how,” the shipping company executive said.
Govt advised ship operators to use diesel
During the January 9 meeting, the Government advised ship operators to
use diesel oil till the situation improved. But, ship owners say that this was
not a workable and sustainable option.
“That is not a workable and sustainable solution because diesel oil is
costing ₹87,000 a ton today. At least, we know we will not be using diesel oil
and as soon as we exhaust our low sulphur fuel oil stock, we have no option
other than to stop operating ships,” the shipping company executive mentioned
“Each coastal vessel typically consumes as much as 25 tons of bunker a
day. Already from normal fuel oil, which was costing Rs30,000 a ton, we had to
move to low sulphur fuel oil priced at Rs55,000 a ton and that also is not
available and now they want us to use Rs 87,000 a ton diesel oil,” the
That aside, there are technical issues related to use of diesel oil on
the ships’ engine.
When ships stop operating, it affects transshipment
business from Indian ports
A stoppage of operations will also hit India’s efforts to promote
container transshipment business from Indian ports.
Once, exporters and importers realise that lack of low sulphur fuel
oil on the east coast will hamper feeder shipping services, they will again
shift back to Colombo and Singapore for their transshipment needs.
We lose transshipment business again to
“Then, it will be very difficult to bring them back to India. After
all the effort we have made to bring them here, we are going to lose transshipment
business again to foreign ports,” the executive added.