Or the fiasco over demurrage charges at Ravva

Vol 6, PW 8 (19 Jun 02) People & Policy

CAIRNS DIFFICULTY AT Ravva relates to a much smaller but no less significant payment of Rs1.56cr ($320,000) in demurrage charges claimed by Shipping Corporation of India.

Dispute centres on the customs seizure oftwo crude oil tankers, Shaitan Singh and Dhan Singh Thapa, on April 3rd and 8th respectively. Both were carrying Ravva crude for Hindustan Petroleum's refinery at Vizag.

Unwittingly, customs impounded the tankers believing that Cairn should be paying a new rate of Rs1, 800 cess per tonne announced in the 28th February budget. But Cairn's PSC caps cess to Rs800 per tonne.

When the oil and finance ministries finally resolved the misunderstanding, the two tankers had been in dock for eight and five days respectively, incurring a hefty demurrage charge of $320,000. Argument now centres on who'll pay -Cairn, HPCL or Shastri Bhawan During the crisis, Hindustan Petroleum panicked at dwindling oil supplies for its refinery and asked Cairn to "take up the matter at the highest level for an immediate solution" and be ready to pay all charges for the tankers' delay and detention.

Cairn refused and bluntly told the Indian refiner to claim demurrage from the government, whose slow response and poor coordination led to the crisis in the first place. "We advise you to seek necessary clarification from the government before contemplating realisation of the demurrage amount," reads a Cairn note to HPCL.

"The Ravva joint venture is in no way responsible for the causes and effects of the government's action."