| picture imperfect: US troops remove a portrait of Saddam Hussein at Iraq’s main port of Umm Qasr on Friday. (Reuters)
New Delhi, March 21: An Indian ship has sailed smoothly into Kuwaiti waters to pick up a consignment of liquefied petroleum gas (LPG) for Indian Oil Corporation (IOC) even as US missiles rain on adjoining Iraq.
“This is as close as it gets to the heart of the war zone and its business as usual at the Kuwaiti port of Mina Al Ahemdi,” a senior IOC official told The Telegraph. The port is around 10 to 15 kilometres from Iraq’s Umm Qasr port in Iraq, which was captured today by US troops supported by heavy artillery fire.
The Indian ship, Maharishi Vyas, belongs to Varun Shipping and it will bring back a cargo of 13,000 tonnes of LPG to Mangalore. It is expected to set sail for home on Saturday.
Sources said the ship has been hired at a freight rate of $ 25 per tonne, which works out to $ 3,25,000 for the entire consignment. This is reported to be the pre-war freight rate and there has been no increase due to the US-led attack on Iraq.
In fact, there has been no increase in the war risk premium at all as far as ships flying the Indian flag are concerned. These ships are insured with the Government of India, which pays the claim for any damage.
Although the public sector General Insurance Corporation collects the war risk premium from the shipping companies, it goes to the government corpus.
The Indian ships pay a war risk premium every year along with the annual renewal of the hull and machinery (H&M) premium. The value of this war risk premium was raised at the time of the US war with Afghanistan about a year or so ago and has not been reduced since then.
The Indian system of war risk insurance is, therefore, quite different from the other countries, where private insurance companies deal with this cover. This is largely determined in the London insurance market and varies from day-to-day according to the threat perception. This could be as much as 0.05 per cent of the H & M value, depending on how close to the war zone a ship has to enter.
Even within the Persian Gulf, the war risk insurance rates could vary. Thus, for Saudi Arabia and Oman, it would be lower than for Kuwait or the UAE which are closer to the war zone.
However, with US troops reported to have captured the Umm Qasr port in Iraq, the war risk premium is likely to come down further. This is the only deep-water port in Iraq and is situated about 10 kms from the Kuwait border.