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IMO's norms may hit Indian shipping
DEBDEEP CHAKRABORTY
Friday, May 04, 2012, 11:11 Hrs  [IST]

The Directorate General of Shipping has initiated necessary steps for survey and inspection of Indian ships to ensure compliance with the series of mandatory measures adopted by the International Maritime Organization for increasing energy efficiency and reducing emission of greenhouse gases from international shipping.

During the 63rd session of IMO's Marine Environment Protection Committee, held in London from February 27 to March 2, this year, four sets of guidelines were adopted to assist in the implementation of the mandatory regulations on energy efficiency for ships in MARPOL Annex VI. The regulations will enter into force on January 1, next year.

The International Convention for the Prevention of Pollution from Ships (MARPOL) covers prevention of pollution of the marine environment by ships from operational or accidental causes. India is a party to the Convention.

The guidelines adopted by the MEPC for implementation of energy efficiency measures include guidelines on the method of calculation of the attained Energy Efficiency Design Index for new ships, guidelines for the development of a Ship Energy Efficiency Management Plan, guidelines on survey and certification of the EEDI and guidelines for calculation of reference lines for use with the EEDI. The aim of the guidelines is to support member states in the uniform implementation of the amendments to MARPOL Annex VI Regulations for the prevention of air pollution from ships, adopted in July 2011. The amendments had added a new chapter to Annex VI on regulations concerning energy efficiency for ships to make the EEDI mandatory for new ships and the SEEMP applicable to all ships.

The EEDI is a non-prescriptive, performance-based mechanism that leaves the choice of technologies to be used in a specific ship design to the industry. As long as the required energy-efficiency level is attained, ship designers and builders would be free to use the most cost-efficient solutions for the ship to comply with the regulations. The SEEMP establishes a mechanism for operators to improve the energy efficiency of ships.

The MARPOL Annex VI Regulations for the prevention of air pollution from ships reduces the sulphur limit in fuel oil for ships in phases. Starting July 1, 2010, the sulphur cap in emission control areas had been reduced from 1.50 per cent to 1.00 per cent. This would be further reduced to 0.10 per cent on January 1, 2015. The global sulphur cap, as of January 1, 2012, had been reduced from 4.50 per cent to 3.50 per cent. This would be further brought down to 0.50 per cent on January 1, 2020, or 2025, depending upon a feasibility review in 2018.

India had acceded to the MARPOL Annex VI regulations for the prevention of air pollution from ships in November last year so as to avail waiver of the requirements of compliance with the EEDI. Parties to the MARPOL Annex VI have the option to waive the EEDI requirement on their ships for a maximum of 4 to 6.5 years after the entry into force.

The IMO's mandatory measures for improving energy efficiency and reducing greenhouse gas emissions are likely to have a considerable impact on the Indian shipping industry. Already reeling under pressure due to low freight rates and high fuel prices, shipping companies would now have to face a further increase in operating costs.

According to a report released by Fitch Ratings in January, the 2012 outlook for the Indian shipping industry is negative and Indian shipping companies are likely to report reduced cash flows from a fall in revenues and profitability, which will weaken their credit metrics. It said that unfavorable demand-supply dynamics in the global shipping industry driven by low global-trading levels accompanied by fleet additions across segments in the current year would be a significant drag on the revival of charter rates. It also pointed out that in 2011, operating costs of shipping companies had increased considerably due to escalating bunker fuel costs, which account for roughly 40 per cent of operating costs, in line with high crude oil prices.
 
                 
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