THE STATE TRADING CORPORATION

TRANSPORTATION COSTS FOR PETROLEUM PRODUCTS

1. Madam Speaker, with your permission, I propose to make a
statement with regard to the costs incurred by the State Trading
Corporation (STC) for the transportation of petroleum products for the
country from May 2011 to July 2016.
2. On 08 September 2015, I informed the House that in November
2009, the STC signed a Contract of Affreightment (COA) with Betamax
Ltd for the transportation of petroleum products over a period of 15
years at an estimated minimum cost of 10 billion rupees, excluding the
cost of bunker fuel, demurrage fees, port dues, and the element of
escalation rate. The COA became effective in May 2011.
3. Towards the end of January 2015, the STC stopped having
recourse to the services of Betamax Ltd.
4. From May 2011 to January 2015, Betamax Ltd had transported
4,067,703 tons of petroleum products for the STC for which the STC
had paid the sum of 125,244,128 USD to Betamax Ltd, that is, an
average of 30.79 USD per ton.
5.
For the period February to November 2015, the STC had recourse
to spot charters for the transportation of 859,486 tons of petroleum
products and has paid freight and demurrage amounting to 22,383,358
USD, that is, an average rate of 26.04 USD per ton. Thus, the STC has
saved 4.75 USD per ton, representing a total amount of 4,082,559 USD
for the said period.

6. In the meantime, the STC has carried out a tender exercise for the
award of Contracts of Affreightment to cover the period December
2015 to July 2016, that is, the end of the current contract of supply of
petroleum products between the STC and the Mangalore Refinery
Petrochemicals Ltd. The STC had enlisted the services of an
international consultant, Ocean 5 Gmbh, for that purpose.
7. I am informed by the STC that on 26 and 30 November 2015, it
has proceeded with the award of two Contracts of Affreightment for
the transportation of white oils and black oils respectively for the
period covering December 2015 to July 2016.
8. As per these COAs, the STC estimates that 786,000 tons of
petroleum products would be transported to Mauritius with freight
costs amounting to 17,910,480 USD, that is, an average of 22.78 USD
per ton, excluding demurrage fees.
9. In this context, when making provision for two days of demurrage
per trip, the average cost for freight and demurrage would amount to
23.79 USD per ton.
10. Thus, when compared with the average rate of 30.79 USD per ton
paid to Betamax Ltd, it is estimated that the savings to be made by the
STC would range between 7 to 8.01 USD per ton, representing a total
amount between 5,502,000 to 6,295,860 USD for the period December
2015 to July 2016.
11. Consequently, for the period February 2015 to July 2016, the STC
would make savings of not less than 9.5 million USD.
I thank you, Madam Speaker.
02.12.2015
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