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Disputes arise over valid insurance requirement for ports

Disputes arise over valid insurance requirement for ports

The recent introduction of a regulation requiring approved insurance companies for ships entering the port of Alang has sparked controversy, particularly within the ship recycling industry. This move by the Central Government, while simultaneously providing incentives to promote the industry, has raised concerns about the potential impact on ship-breaking operations.

According to the circular issued by the Central Government, any vessel entering Indian coastal waters must have insurance coverage that complies with the established rules. The rationale behind this requirement is to address potential scenarios such as ship sinking, oil pollution, ship abandonment by the owner, non-payment of crew wages, and accidents caused by third parties, which could result in significant compensation claims or casualties in the Gulf of Khambhat.

Many ships arriving in Alang do not currently possess the Protection and Indemnity (P&I) insurance coverage mandated by the Port Entry Rules 2012, and the government has recently tightened the enforcement of these rules. Consequently, in cases where accidents occur involving non-approved insurance companies, disputes may arise when seeking compensation. To address this issue, the government has strengthened insurance regulations.

However, while the Central Government is taking measures to revitalize the ship recycling industry in Alang, the insurance requirements could potentially hinder these efforts. This apparent double standard has sparked discussions and debates regarding the government’s approach to the industry as a whole.

One specific concern relates to dead vessels. When a ship with a non-functioning engine (a dead vessel) is towed to Alang by another vessel, it becomes ineligible for insurance coverage. This raises questions about the future of such vessels in the ship-breaking process. The lack of clarity surrounding this matter has led to widespread confusion and uncertainty.

Industry representatives are currently engaged in discussions with the Gujarat Maritime Board (GMB) to address these issues. Vishnukumar Gupta, President of the Ship Recycling Industries Association (India), highlights the impact of insurance requirements on cargo ships, which can increase costs and cause delays.

Meanwhile, Captain Ashwin Solanki, Chief Nautical Officer at GMB Gandhinagar, emphasizes the importance of valid insurance in ensuring adequate compensation for accidents and the interests of vessel purchasers.

As the ship recycling industry grapples with these challenges, ongoing dialogue and negotiations with the GMB aim to find a resolution. The industry seeks to strike a balance between the need for insurance compliance and the smooth functioning of operations.

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