The Indian shipping companies are looking at long-term contracts from PSUs, and the ministry of shipping has written to the ministry of finance to come up with a policy regarding such long-term contracts. A long-term contract will ensure a steady cash flow and a strong order book, which in turn will help them to gain back the confidence of the foreign lenders, at a time when ECBs (external commercial borrowing), a major source of funding for the ship owners have completely dried up.
A long term contract would be for around 10-15 years, whereas currently the PSUs operate on a need basis, or at the most they enter in to a one year contract.
According to sources, Shipping Corporation of India has put forth such a request to the Steel Authority of India. However, other state-owned companies have also been requested to consider such long-term contracts.
?If not soft loans, at least government should work towards such long-term contracts. It will help the Indian ship owners, especially in such economic crisis,? commented Indian National Shipowners Association (Insa) secretary SS Kulkarni. ?The government is in a position to offer long term contracts, and we are putting all efforts so that the government comes up with some relief for the Indian ship owners,? he added.
Earlier the shipping companies had asked the government to set up Rs 10,000 crore fund, which would help them in acquiring ships. Hence the ship owners are pinning their hopes on the government to offer them some support in such troubled times. However, as the election is round the corner and the new government to take charge only after May, there is no likelihood of an immediate relief from the government.
?It is unlikely that something will happen soon. However, such long-term contracts will help us to ensure a steady cash-flow. Moreover, foreign loans are the major source of funding for Indian shipping companies. Hence if the foreign lenders see that acquisition plans of the shipping companies are supported by the PSUs, then their confidence in lending will come back,? commented Mercator Lines president Anil Devli.