Chief operating Officer of Adani Bunkering, Mr. Rajesh Mohata was one of the key speakers at the India Ship Summit, 2016. Bunkering opportunities at Indian ports was the topic addressed by him. There has been more than 50% drop in fuel oil price in the past one year. This has reduced the entire international shipping industry’s daily bunker costs by around USD 120 million per day assuming an annual market for bunker fuels of 257 million tons. With the freight markets expected to remain weak for next 2-3 years, the supply demand gap is likely to reduce in 2018 setting the foundation for slow recovery in freight markets.
Mr. Rajesh Mohata first spoke about the opportunities. “India should become a bunkering hub because each vessel coming in for bunkering also generates revenue for the ports and the agencies which coordinate the bunkering process. Low resource utilization is resulting in high fixed costs. We need to provide economies of scale to the customer. We need to compete with bunker prices of Singapore and Fujairah. Currently majority of ports in India are charging 14$ when compared to Singapore’s 50 cents per ton. We will be able to earn much more than what we are doing today if we reduce the bunkering charges at ports. Ship owners and ship management companies prefer Singapore and Fujirah because they have crew changing facility, ship management and technical services. If we start similar services in India, we will not only generate employment but also a bunkering potential.”
“When economies of scale come into the picture, the costs also start coming down making fuel cheaper. Currently India is short of fuel oil. We have idling of assets. We are not able to use them for the development of the industry. Presently we are doing 1000k per month. With the GDP growing at the rate of 7.4% and the ease of business, there is a potential for the business to grow 8MMT per month per annum.”
Sharing one of the breakthrough ideas introduced by his company to improve the bunkering facilities in India, Mr. Mohata said, “Charges should be minimized for bunkering only call to grow business in India.”
He also sought the support of various associations and industries for two of his company’s initiatives. “As per the existing laws, the container vessels moving along the coast get duty free vessels which saves costs. Since the oil companies are subject to certain laws, they cannot provide duty free bunkers. So, vessel owners are taking duty paid vessels from oil companies. We are trying to approach the government to formulate a policy about making it possible to provide duty free bunker fuel to all the vessels which are running along the coast under the new GST rule. The new generation engines are not only cheaper but have the capacity to absorb very high viscosity fuel oil. But Indian laws don’t allow the import of such fuel. We need to allow fuel oils which are being marketed all across the globe. Any vessels coming to the Indian Ocean should be able to get the fuels they are looking for. These will not only help in lowering the logistic cost of the Indian industry but also help in developing the maritime sector.”
When talking about the recent developments in the bunkering business, Mr. Mohata spoke about the opportunity in diverting the mass flow meter business to India among other things. The major refineries are putting up coker plants and minimizing the production of fuel oil. The availability of fuel oil could be an area of concern. The recent down turn has highlighted the importance of credit risk.
Pointing out the infrastructural challenges, Mr. Mohata said, “Bunkering setup at important ports like Paradip, New Mangalore and Tuticorin needs to be expedited. The low pumping rate bunkers needs to be looked into along with the non-availability of pipelines at jetties, and bunkering terminals.”
Citing the positive approach taken by the government in developing the Sagarmala project and Inland waterways, Mr. Mohata ended his session.
Source: TST Newsdesk
In Conversation With Mr Ajay Reshamwala, Managing Director, Reshamwala Shipbrokers
India Tanker Shipping Trade Summit 2018