World Bunkering > News > Spring 2010 > Building up bunkering in India

Basheer Ahmed Sayeed

There is no doubt there are a number of major challenges that will need to be overcome for bunkering to shift from a “potential industry for growth” to a mature industry in India. But the signs are encouraging.

India has a coastline that stretches 7515km with 12 state-owned major ports, four intermediate ports and 183 minor ports. Mundra has emerged as the major port for shipping trade in India. For international shipoperators that pass through the Arabian Sea and Indian Ocean region, being able to regularly use Indian ports for bunkering would significantly increase the development of the industry in India and provide them with a strategic and accessible location to access bunker fuel.

The tax issue

While sales volumes are a long way off those of Singapore, Rotterdam or Fujairah, there is no doubt that tax free or low taxed bunker sales would mean very competitive bunker prices and subsequently many more vessels would be berthing at Indian ports. Encouragingly, there were comments at the recent Bunker Asia Conference in Singapore suggesting that the Indian government was beginning to take a keen interest in the development of the country’s bunker market, with talk of further tax exemptions for international vessels. Introducing tax reductions, developing the port infrastructure and offering consistently competitive fuel prices would provide the added boost to enable strong growth of bunkering in India.

At the moment, the taxation situation varies from state to state, and is not managed centrally via government. Taxation – specifically value added tax – differs depending on the state, and the type and grade of bunker fuel. While higher tax rates almost certainly lead to higher bunker prices in Indian ports at the moment, the talk of tax exemptions by government is gaining some momentum. However, while fuel prices are improving and getting more competitive against other international ports, these prices are still open to fluctuations on a daily basis.

Improving the infrastructure

Some of the recent developments that have been taking place include the introduction of more high capacity barges; 380 cSt fuel is now available at all major Indian ports; fuels complying with ISO8217:2005 and Marpol Annex VI; and the once conventional method of supply by truck is being replaced slowly by world-class infrastructure incorporating pipeline, barge and onshore storage capacity. The availability of support services for ship supplies, such as spares, also continues to get better.

ChemoilAdani

It has been just over 12 months since Chemoil joined forces with Adani Enterprises to form the joint venture ChemoilAdani, and already encouraging in-roads have been made by the new venture as the company leads the development of the Indian bunkering market.

This joint venture has been successful from the beginning because it leverages the right mix of competencies and world-class capabilities from both Chemoil and Adani. Chemoil with its expertise in sourcing and delivering marine fuel utilising its global integrated supply chain; and Adani with its in-depth local market knowledge, proficiency in developing port infrastructure and distribution capability.

After starting operations at Mundra port in Gujarat state in March last year, monthly sales volumes of 50,000 tonnes were quickly achieved. There was expansion in 2009 into other Gujarat ports such as Kandla, Sikka, Jamnager, and Navlakhiand Bedi. ChemoilAdani has also been supplying the port of Mumbai in the western state of Maharashtra for the past six months as well as Chennai port in the Tamil Nadu state.

There is further expansion for ChemoilAdani on the horizon for our Indian operations, with an increase of our onshore storage capacity at Mundra port to 120,000 metric tonnes and the addition of a 3,000 dwt double-hull bunker tanker in 2010.

The new terminal facility – part of an upgrade program to develop infrastructure and expand storage capacity by the Adani Group at Mundra port – will be leased to ChemoilAdani. The terminal is expected to be completed and operational by January 2011. The new modern and fully automated terminal will operate as an exclusive bunkering facility.The total volume storage capacity of 120,000 tonnes will made up of 12 storage tanks – 4 x 15,000; 4 x 10,000; and 4 x 5,000. There will be a pumping capacity of up to 1000 mt/hr for bunkering, for loading cargo into vessels up to 2,000 mt/h, and with a receiving capacity of 2,000 mt/h. These will be faster pumping rates than are currently available at the existing 90,000 metric tonne terminal at Mundra port. This new facility will enable ChemoilAdani to be even more competitive in the bunkering marketplace with fuel pricing, as the company will be able to take advantage of faster terminal turnaround rates, improved reliability of fuel delivery and better manage its overall operational costs.

ChemoilAdani has quickly established itself as the largest supplier of marine fuels in Gujarat as well as the largest supplier operating in the Indian market today.