IOC hires foreign flagged crude carrier as domestic players fail to match low bid

Indian Oil Corporation (IOC) has hired a foreign flagged very large crude carrier (VLCC) at a day rate of $31,950 for seven years, upsetting the government’s plans to use such long-term contracts to help expand the domestic shipping capacity to haul more oil cargoes for strategic reasons.

IOC had called bids earlier this year to hire a 10-year-old oil super tanker for a firm period of five years — with two extensions of one year each — in a first such experiment brokered by the shipping and oil ministries.

The move followed intense lobbying by local shipping groups, which said that long-term contracts would facilitate funding at better rates to buy ships. Local fleet owners participating in the tender were given the right of first refusal to match the winning quote if the lowest bid was offered by a foreign owner.