Next problem for Indian economy: Fuel shortage for domestic shipping

Ships hauling everything from coal to iron ore and consumer goods on domestic routes along India’s coast may run out of fuel as the nation struggles to meet new environmental standards.

The maritime industry in Asia’s third-largest economy is facing a shortage of cleaner-burning fuels as local refineries aren’t producing enough after the Jan. 1 introduction of the rules, known as IMO 2020. Under the standards, vessels without pollution-reducing kits must burn oil with lower sulfur content.

While foreigns ships calling at India can refuel at hubs like Singapore and Fujairah, the deficit of IMO-compliant fuel is a threat to vessels plying India’s coast. The shortage is another potential near-term hurdle for an economy where economic growth rates have halved since 2016 and inflation is surging.

“Adequate quantities of low-sulfur fuel oil are not available at quite a few ports, especially on the eastern coast,” said Ranjit Singh, chief executive officer of Essar Shipping Ltd. “If the marine fuel problem is not resolved, I think ships will come to a standstill.”

Some local refineries simply can’t ramp up output quickly enough to meet consumption, while others aren’t prioritizing the production and supply of grades such as very-low sulfur fuel oil and marine gasoil.

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