TAIPEI: Shipowners have expressed concern over an increase in fuel costs for vessels calling at Taiwan’s ports from 2019 when it moves to 0.5% sulfur fuel oil from 3.5% and the subsidies to encourage the switch prior to the deadline not being sufficient, market sources said Monday. This comes after an announcement last week that Taiwan would implement a maximum sulfur cap of 0.5% for all vessels entering their waters and calling in their ports from January 1, 2019.
In view of current prices for 380 CST 3.5% sulfur fuel oil at around $370-$390/mt on average, any 0.5% sulfur fuel is going to cost much more than this, and the subsidies on offer are not going to be sufficient at all, another shipowner said.
Not many people are providing low sulfur fuel oil, so people will likely use marine gasoil, which costs $350-$400 more per metric ton. An Aframax tanker discharging uses 90 mt of MGO to shift between the outer and inner anchorage,” a shipowner said. Aframax shipowners are already struggling to earn a timecharter equivalent earning per day of $8,000 in the Southeast Asia region, he added. Taiwan is looking to spend a total of T$77 million ($2.6 million) on anti-pollution subsidies, to encourage shippers to use more environmentally friendly-fuel and slow down at the country’s ports, the Ministry of Transportation and Communications told S&P Global Platts in an e-mail. From February 1 until the end of this year, the T$5,000 subsidy is available for both foreign and domestic vessels plying international voyages, and the total allocated amount for this subsidy over this period is T$45 million, which is expected to subsidize 9,000 vessels. This subsidy is handled and issued by the Taiwan Port Corporation. Vessels would be required to submit the following information to apply for the subsidy: the vessel’s Oil Record Book, a proof of purchase and the vessel’s last 10 ports of call list. The subsidy will be dispensed on a monthly basis. From 2019, there will be no incentive measures and those who do not comply will be fined between T$100,000-T$500,000,” said Liao Jun-ying, chief of the Harbor Planning Division, at Taiwan’s Ministry of Transportation and Communications. Taiwan has also allocated T$32 million to encourage vessels to slow down within a radius of 20 nautical miles from the country’s ports. This program is a T$8,000 subsidy for container vessels and cruise liners. A previous vessel slowdown program in 2006 had seen a 40.6% reduction of sulfur oxides, nitrogen oxides and suspended particles, reducing pollution by 82,000 tons. In 2018, Kaohsiung Harbor is expected to achieve a 60% slowdown in vessel speeds.
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