India depends on foreign ships every year to transport crude oil and fuel. A huge expenditure of about Rs 6 lakh crore is incurred annually on this logistics. Now major oil companies are going to reduce this expenditure. This is a big initiative to save the country’s money. According to the report of Economics Times, Indian Oil, Bharat Petroleum and Hindustan Petroleum have taken a big decision to form a special joint venture with Shipping Corporation of India.
Shipping Corporation will have a major stake
The three government oil companies will have a total stake of 35 percent in this proposed new company. At the same time, Shipping Corporation will play the role of major partner in this new company with 50 percent. The remaining 15 percent stake will be with the Maritime Development Fund (MDF). MDF is a special initiative of the government, which has been created with a corpus of Rs 25,000 crore to provide financial support to the maritime sector. Its main objective is to eliminate dependence on foreign ships and to safeguard valuable foreign exchange reserves.
Investment of ₹15,000 crore, 59 new ships
According to Shipping Corporation Chairman BK Tyagi, work on the technical terms of this joint venture is going on at a fast pace. 59 ships will be purchased under this master plan. These will include large crude carriers, gas carriers and offshore ships. A huge investment of around Rs 15,000 to 17,000 crore is expected in this entire procurement process.
How will this new joint venture work?
The roles of all the partner companies in this new partnership are very clear. The shipping corporation will provide its technical, operational and regulatory expertise to the venture. On the other hand, oil companies will give firm guarantee of freight through long-term contracts. The entire responsibility of management of these ships will be taken over by the Shipping Corporation, for which it will receive a fixed management fee.
The country’s energy security will be strengthened
According to officials, this step will reduce the trend of hiring foreign flagged ships to a great extent. This will not only prevent foreign exchange from flowing out, but India’s energy security will also be strengthened unprecedentedly. Domestic control of transportation costs will make the energy supply system more stable and secure in the future.