Shipping Corp Could Gain

Mumbai, September 16: | Updated: Sep 17 2003, 05:30am hrs
Shipping Corporation of India (SCI) could stand to gain by way of another yearly contract for transporting crude, if there is a delay in the divestment process of Hindustan Petroleum Corporation Ltd (HPCL).

The total crude requirement of HPCL is around 13.3 million tonne, of which 2.8 million tonne is on-spot basis while it enters into a CoA (contract of affreightment) with SCI for the rest. Of the 10.5 million tonne of crude, four million tonne of crude is procured through domestic sources like ONGC while around 6.5 million tonne is bought from the Middle East.

The agreement with SCI for crude transportation is on COA, which is based on a market index rate called AFRA (average freight rate assessment) published by the London freight brokers association. The AFRA rate is arrived by calculating the average rates prevailing in the London market, exactly one-and-a-half months prior to the date, shipping sources said. A CoA agreement also varies for different periods ranging from 3 months to a year.

Meanwhile, the revenue to SCI kitty as a result of another CoA contract could not be ascertained. However, a recent contract bagged by Mercator Lines for transporting 4.2 million tonne of crude from Gulf to Mangalore for Mangalore Refineries and Petrochemicals was valued at Rs 100 crore.