Compliance with new sulphur norms to hit GE Shipping’s books

Great Eastern Shipping, the country’s largest private sector shipping company, will see operational expenses and capex jump as it prepares to comply with the International Maritime Organization (IMO) 2020 global sulphur limit.

“Currently, we are studying a couple of sample ships and will zero in on the fuel option or a combination of options latest by early 2019,” G Shivakumar, executive director and chief financial officer told Business Standard. IMO has set a global limit for sulphur in fuel oil used on board ships of 0.50 per cent m/m (mass by mass) from January 1, 2020. The current global limit for sulphur content of ships’ fuel oil is 3.50 per cent m/m.

Under the new global cap, ships across globe will have to use fuel oil with a sulphur content of no more than 0.50 per cent m/m, against the ongoing limit which has been in effect since January 1, 2012.

At present, the shipping industry has three options— usage of scrubber, low-sulphur fuel and usage of blended fuel, to align itself new global sulphur limit.

Of the three, fitting of scrubber is the costliest option ranging between $2.5 to $4 million per equipment.

GE Shipping, however, is evaluating the costlier scrubber option for select vessels, mainly the Capesize ships.

“If we use scrubbers, it is our capex which will go up as a new fitting has to be made in the vessel. Alongside, it would also call for some amount of operational expense as power consumption of the vessel would increase,” said Shivakumar.