No rules on wreckage removal cost India dear

No rules on wreckage removal cost India dear

India is paying the price for not having rules to deal with removal of shipwrecks along its coast. This was driven home after a vessel laden with iron ore fines sank near Paradip port in Orissa on 9 September.

But in this case, the dry bulk carrier named Black Rose did not have a valid insurance certificate. The ship’s owner—Pacmar Shipping Pte Ltd—fraudulently used a certificate from another ship.

Therefore, the insurance firm is not undertaking the salvage operation. Paradip port authorities are now trying to remove oil from the sunken ship at its own cost. The port is also mulling legal action against the owner.

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This could have been avoided if India had wreck removal rules in place. It did try to frame one but gave up following opposition. In 2005, the shipping ministry drafted rules making it mandatory for ships calling at Indian ports to possess a valid cover for wreck removal and oil pollution from a government-approved insurer.

The wreck removal and port entry rules were drafted to ensure that shipping companies pay for damages caused by ships to ports and harbours. If ships have valid cover, ports can claim expenses for wreck removal and damages for oil spillage directly from insurers.

But the proposed rules were put in cold storage after strong lobbying against it by the International Group of Protection and Indemnity (P&I) Clubs, a group comprising 13 mutual P&I clubs that between them provide cover for oil pollution and wreck removal for about 90% of the world’s ocean-going ships by capacity.

These clubs, based in the UK, Norway, the US and Japan, are associations owned and controlled by insured shipowners. They operate on a non-profit-making mutual basis; members pool their resources to meet losses suffered by individual members.

The sinking of the Black Rose may also have happened due to lapses on the part of Indian exporters of iron ore fines, overseas buyers of the commodity and shipowners, ignoring the dangers involved in shipping it during the monsoon. Iron ore fines, pieces of which are less than 6mm, are created as a result of mining, crushing and processing the larger pieces of ore.

Besides the Black Rose, two other incidents just a few days apart involving ships carrying iron ore fines from India also point in the same direction. These casualties reveal negligence in complying with applicable international and national regulations for safe carriage of solid bulk cargo, particularly iron ore fines. The flouting of these regulations may have resulted in shifting of cargo at sea that could have led to the sinking.

The export of iron ore fines from India’s east coast has seen a spurt over the past couple of months despite the monsoon. This is because ports on the west coast are closed for loading iron ore fines between June and September.

When iron ore fines are loaded in the rain or left uncovered on the berth, they absorb significant amounts of water. Such cargoes tend to slide, disrupting a ship’s stability and could cause sinking. An exporter of such cargo is obliged to provide both the moisture content and the transportable moisture limit to the carrier.

Another issue is the age of the ship. Though India’s maritime regulator has set an age limit of 25 years for vessels hired by Indian entities to carry cargo in and out of the country, this rule has failed to check older and substandard ships such as Black Rose from operating in Indian waters. This is because foreign buyers do not need the regulator’s permission when arranging transportation of cargo is their job.

India’s exporters looking to maximize profits, overseas buyers looking to buy cheap and shipowners looking to earn some money during a downturn may have overlooked norms when China turned to India for buying the commodity while it was locked in price negotiations for annual contracts with Rio Tinto and other suppliers.

It would, therefore, not come as a surprise if the panel set up by the shipping ministry headed by national shipping board chairman P.V.K. Mohan to look into the recent mishaps were to suggest a ban on export of iron ore fines during the monsoon from all Indian ports.

P. Manoj is Mint’s resident shipping expert and writes on issues related to shipping and logistics every other Friday.

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