- STAC Clears VLGC Design; $120 Million Build Cost Estimated.
- Govt Moves Ahead with Local VLGC Builds After Spec Approval.
- VLGC Plans Progress as STAC Submits Specifications.
The Indian government is forging ahead with plans to build five Very Large Gas Carriers (VLGCs) right here at home, aiming to boost our local shipbuilding industry. A Ship Technical Advisory Committee (STAC), working under a joint effort with an inter-ministerial Joint Working Group (JWG), has wrapped up the technical specifications for these vessels, which are designed to transport Liquefied Petroleum Gas (LPG), reports The Economic Times.
VLGC Specifications Finalised; Construction Costs Estimated
“The Ship Technical Advisory Committee (STAC) has finalised the technical specifications of the VLGC to be built at Indian shipyards at a meeting on Tuesday. It will be submitted to the JWG soon to take the plan forward,” said a source briefed on the development.
Building a 93,000 cubic meter VLGC is currently priced between $120 and $125 million. STAC has previously handled similar projects for Medium Range (MR) tankers.
INSA is Against Local MR Tanker Construction
The push to manufacture VLGCs locally has met resistance from the Indian National Shipowners’ Association (INSA), which represents domestic fleet owners. INSA argues that the current fleet already has enough MR tankers and believes the government should concentrate on areas where there’s a real shortage, like VLGCs.
INSA has informed the government that there are plenty of MR tankers flying the Indian flag to satisfy the needs of oil companies. Therefore, they’ve suggested that the government explore “other sectors and segments” of shipping where India is experiencing a shortfall, particularly in VLGCs. According to INSA, India has over 30 MR tankers in operation, while state-run oil companies only need about 18. However, a source has pushed back against INSA’s claims. “INSA is against building ships locally. For some strange reasons, they prefer to buy SECOND-HAND ships from abroad,” the source said.
Government Pushes Back Against INSA’s Stance
Government officials have rejected INSA’s position, arguing that future demand and aging vessels necessitate building MR tankers domestically. “INSA doesn’t want the MR tankers to be manufactured here. They are saying you go for VLGC because there is no requirement for MR tankers,” the source disclosed. “Today there may be no requirement for MR tankers but by the time these tankers are built by 2030 there will be a requirement plus there will be an increase in business after five years. Who is going to fill this gap,” the source asked.
The government also pointed out that 21 of the 30 MR tankers under the Indian flag are ageing and will need replacement within five years. “Further, 21 of the more than 30 MR tankers operating under the Indian flag are old and have to be replaced over the next 5 years. Who will build the ships, and when will India create shipbuilding facilities?” he said. The source added: “INSA has a single agenda: to buy second-hand vessels from abroad. That is why they are looking to block the construction of MR tankers locally. So much work has been done, including finalising the technical specifications of the MR tankers, which was submitted to the government. Even then they are not in favour of building MR tankers here.”
IOCL Delays Tender Despite PMO’s Deadline
Indian Oil Corporation Ltd (IOCL) has put the brakes on issuing a tender for 10 MR tankers from Indian shipyards, even though the Prime Minister’s Office (PMO) clearly instructed them to do so by June 15.
“The PMO gave a clear order, whatever it may be, to float the tender by 15 June,” the source revealed. Senior officials from the Ministry of Petroleum and Natural Gas (MoPNG) emphasised the urgency of the situation during a Joint Working Group (JWG) meeting in early June. They reminded oil companies that any worries about costs should be handled by considering the project as strategic.
The MoPNG firmly told the oil companies that even if the expenses are steep, they should regard it as a “strategic project” for the nation and seek board approval for any waivers before moving forward with the tender. “Still, they haven’t done it,” the source added. A JWG meeting scheduled for June 23 had to be postponed because IOCL missed the PMO’s tender deadline.
INSA Reasserts Demand for VLGCs Instead of MR Tankers
Around the same time as the delayed tender, INSA reached out to T K Ramachandran, Secretary of the Ministry of Ports, Shipping and Waterways, reiterating their preference for VLGCs over MR tankers.
During this period, INSA took action and informed T K Ramachandran that India “needs VLGCs, not MR tankers,” according to a source familiar with the discussions.
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Source: The Economic Times
