Prathiba Shipping Company Ltd has decided to convert all its vessels into domestic flag carriers over a period of two months, as part of an agreement with the surface transport ministry.
Currently, Prathiba has three vessels, all of which are tankers acquired through the bare boat charter cum demise (BBCD) method. Two of the vessels have a configuration of 30,000 dead weight tonnes each. The third has a configuration of 45,000 dwt.
This conversion normally require prepayment of all the outstanding lease rentals. However, according to Sunil Pawar, executive director of Prathiba Shipping, the company has decided to convert all its outstanding lease rentals into a loan. "We have reached this arrangement with the lessors and the repayments will be done over a period of 15 quarters (3.75 years), " he said. The outstanding amount is around $25 million. The conversions are expected to result in an interest savings of about 2 per cent to the company.
This move follows the submission of the committee on coastal shipping, which had recommended that routes along the coast should be restricted exclusively for vessels where the ownerships are Indian and vessels fly only domestic flags.
This recommendation was in line with the suggestions made by the Pinto Committee in 1997. The recommendations were made in order to stem the outflow of foreign exchange through lease rental payments and dividend payout in cases when ownership is of foreign origin. Prathiba initially had four vessels. Pawar said one vessel was repossessed by the lessors, after the company found it was not able to pay the rentals.
