NEW DELHI: The government is likely to allow PSU steel makers SAILBSE 1.05 % andRINL freedom to charter ships directly for their imports of raw material on lines of the dispensation given to oil firms.
Currently, imports by the steel PSUs are done through ships chartered by Transchart, a state-owned enterprise operated by Shipping Corp of India (SCI).
Steel Authority of India (SAIL) and Rashtriya Ispat Nigam (RINL) had been pleading for freedom to charter hire vessels on their own to improve operational efficiency and save cost.
The Union Cabinet is likely take up giving SAIL and RINL freedom to charter ships for imports at its next meeting, a source in the know said.
The source said the two steel makers sought for the nod which would help them to save a hefty amount on the transport charges provided they are allowed to by-pass the Shipping Ministry body.
As per current practice all Central Public Sector Units (CPSUs), barring those already given the dispensation such as ONGC and IOCBSE 0.56 %, need to import cargoes with centralised shipping arrangements to be made through Transchart.
SAIL and RINL had argued that with their own shipping arrangements for imports, circumventing Transchart, they would be able to bring down transportation costs, particularly when their import bill is set to rise manifold following on-going capacity expansions.
The two together import around 14-15 million tonnes of raw materials in a year. As SAIL is expanding capacity to 23.46 million tonnes per annum and RINL doubling it to 6.3 million tonnes, there cumulative imports would likely to go up to over 60 million tonnes by 2020.
SAIL currently imports around 10 million tonnes of raw material currently. As per projections, SAIL's imports would go up to 15-16 million tonnes by 2015-16 and to 45 million tonnes by 2020.
RINL, which is importing around 4 million tonnes of raw material, is likely to import 18 million tonnes by 2020, sources said.