| It is proposed that the amendment will allow IOC to charter vessels on its own only if the import of cargo is done on free on board (F.O.B.) basis, a government official said. IOC will also be expected to give preference to Indian flag vessels, the official added. |
| This issue had generated a lot of heat with the shipping ministry initially being opposed to the proposal. The ministry, however, relented when faced with strong pressure from the petroleum ministry. |
| The shipping ministry is of the view that the step will complicate things further as it will mean that every department will have a 'mini-transchart' unit of its own. |
| Moreover, the official said finalising vessels through Transchart had also resulted in freight savings of Rs 200 crore for IOC. |
| According to the present policy, the import of government owned cargo can only be done through Transchart, which is the centralised chartering wing attached to the shipping ministry, on a F.O.B. basis. |
| In F.O.B. contracts the importer has to only pay for the cost of the material, as he is responsible for making shipping arrangements. |
| The fear has been that once IOC gains freedom to make its own shipping arrangements, it will start importing crude on cost and freight (C&F) basis. |
| Under C&F, the seller makes shipping arrangements and the Indian buyer not only has to pay for the cost of material but also the freight. |
| Officials said the petroleum ministry had favoured only IOC for granting freedom to charter its own vessels as it is the largest crude oil importer, buying around 35 million tonne of cargo involving a freight bill of Rs 1,500 crore. |
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