The Hindu Business Line : Foreign tankers

In the wake of protests from international tanker owners and charterers that the ban was `discriminatory', the Directorate-General (Shipping) is re-examining its decision to put age restriction on foreign-flagged tankers to be chartered by Indian entities.

THE Directorate-General (Shipping) is re-examining its decision to put age restriction on foreign-flagged tankers to be chartered by Indian entities in the wake of protests from international tanker owners and charterers that the ban was "discriminatory" and violative of the Statute on the International Regime of Maritime Ports, which came into effect from July 26, 1926.

The DGS, Mr G. S. Sahni, held a meeting on August 8 to review the June 11 circular to ban all foreign-flagged crude, product and chemical tankers that are over 25 years old as well as gas tankers above 30 years from entering Indian waters with effect from September 1. Besides, the circular said that all tankers above 20 years, which do not have the Condition Assessment Programme 2 (CAP 2) rating for hull, machinery and cargo equipment from the International Association of Classification Societies (IACS), would also be banned from Indian shores.

"We are re-examining the whole issue. If the trade is having any problems, we will overcome these problems," a senior official with DG (Shipping) told Business Line.

The maritime regulator is expected to work out a solution to the vexed issue in the next few days. "We will come out with a fresh circular to amend the earlier decision in the light of protests lodged by foreign tanker operators and other domestic agencies concerned with the issue," the official stated.

Mr Sahni had held his ground when protests mounted from several quarters over his decision to impose age restrictions only on foreign-flagged tankers from entering Indian waters in order to check any possible environmental hazard from sub-standard foreign ships calling at Indian ports. Having consulted all domestic stakeholders involved in the exercise before taking the decision, Mr Sahni was of the view that a re-look at the June 11 circular was not possible. But later the DG changed his mind.

Though, the Shipping Ministry has officially declined to interfere in the issue to prevent a head-on clash with the regulator, its displeasure was conveyed to the maritime administration in no uncertain terms. The Ministry was annoyed with the way in which the DG had issued the circular and the authority on which it was issued.

Moreover, the Ministry had asked the DG to explain the discriminatory nature of the circular which was applicable only to in-chartering of foreign flag tankers while sparing Indian flag vessels from the decision in view of the 1926 Statute which enshrines the principle of reciprocity and equality of treatment and ratified by India along with several other maritime nations.

Article 2 of the Statute on the International Regime of Maritime Ports says: "Every contracting state undertakes to grant the vessels of every other contracting state equality of treatment with its own vessels, or those of any other state whatsoever, in the maritime ports situated under its sovereignty or authority, as regards freedom of access to the port, the use of the port, and the full enjoyment of the benefits as regards navigation and commercial operations which it affords to vessels, their cargoes and passengers."

It further states: "The equality of treatment thus established shall cover facilities of all kinds, such as allocation of berths, loading and unloading facilities, as well as dues and charges of all kinds levied in the name or for the account of the Government, public authorities, concessionaries or undertakings of any kind."

The DGS official, however, said that the 1926 Statute has been ratified by very few countries. "The United States, the erstwhile nations of USSR and even many European countries have not ratified the Statute. It is debatable whether it violates the 1926 Statute. And, the legal basis of the Statute is also not very clear," the official said.

Besides, every contracting state has a sovereign right to deny equality of treatment to other contracting state, the official said. As per reservation set out in Article 8 of the Statute, " Each contracting state reserves the power... of suspending the benefit of equality of treatment from any vessel of a state which does not effectively apply... this statute to the vessels of the said contracting state."

The DGS is of the view that the entire issue has to be looked at in the right perspective. Denying that the decision discriminated against foreign vessels, the official said that it was taken to protect the country's coastal waters.

"As the country's maritime regulator, we control the Indian merchant fleet as they are subjected to Flag State Implementation (FSI) rules. Though Port State Control (PSC) measures exist, we don't have any control over foreign flag ships entering our ports. When foreign ships come and there is a liability, they hide behind the corporate veil. But Indians cannot hide behind the corporate veil," the official emphasised.

The decision exempted Indian owners as the DG felt that Indian fleet should given some more time to gear up and face competition. "Eventually, they will also have to comply with all international norms. There is no escape from that," he noted.

The age restrictions imposed by DGS on foreign tankers has come under attack from the International Association of Independent Tanker Owners. The Intertanko Managing Director, Mr Peter Swift, said that the decision violated international law. Mr Swift was of the view that any regional or unilateral actions were self-defeating and urged maritime nations to act only through the International Maritime Organisation (IMO).

Following protests from Intertanko, the Ministry of External Affairs had asked the Shipping Ministry's views on the DGS' decision to ban ageing foreign flagged tankers from Indian waters.

Though the Indian shipping industry has kept quiet over the issue (since they were not affected by the decision), domestic ship owners feel that the discrimination was not in order. "When India is integrating with the world economy through the WTO, this sort of discrimination is uncalled for. No doubt, safety is of paramount importance, but you cannot put the onus of safety only on the age of the vessel," a ship owner said.

The August 8 meeting held by the DGS has raised a glimmer of hope that the controversy would be sorted out. "We are moving in the direction of sorting out the perceived discrimination in the circular which imposed age restriction on in-chartering of foreign flag vessels whereas Indian flags were exempted. Whatever protests are there, if they are legitimate we are looking into them and will try and address those issues without adversely affecting the National fleet. We are reviewing the circular but what shape it will take you will know shortly," the DGS official said.

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