International Tanker Owners Pollution Federation organised seminar on the pollution response
The International Tanker Owners Pollution Federation (ITOPF) organised a seminar in Beijing this week on the pollution response aspect of the new Chinese Oil Pollution Regulations. The seminar provided a useful opportunity to hear from the China Maritime Safety Authority (CMSA), the P&I clubs and, for the first time, the oil spill response contractors under the umbrella organisation, CACEM.
The China MSA presentation focused on the basics of the rules and the development of an efficient, fair and open emergency response system. Response capabilities must achieve a balance between promoting the shipping industry and protecting the marine environment. To this aim, the MSA emphasised that it is essential that all stakeholders work together.
It was also interesting to learn of the proposed licensing structure for the Chinese oil spill response organisations (SPROs) which is to be based on geographic coverage and response capability. (Note that the MSA has yet to issue lists of approved SPROs). In addition, MSA outlined the fee system that would need to be established as part of the agreement between the ship owner and the oil spill contractor.
Zhang Chunchang, Deputy Director at the China MSA provided examples of the cost structure envisaged with a retainer day rate of USD316 per vessel being provided as a guide to the spill contractors. These fees are designed to cover much of the amortised investment costs – equipment costs, maintenance, training plus annual running costs for the SPROS. Spill response fees would then be in addition to this in the event of an incident. The retainer fees are negotiable but will be supervised by the MSA. There is a contract template with some compulsory, non-negotiable terms, while others are negotiable.
Colin Williams of the International Group of P & I Clubs (IG) gave the P & I perspective. While he was pleased to see China had enacted the CLC and Bunkers Convention, he was disappointed that China had taken a ‘US OPA 90’ approach to clean-up. This will mean that for a spill in China, the shipowner will arrange and manage the clean up directly instead of the government, who have a better idea of resources available and the susceptibility of their coastline.
He highlighted several areas of concern for the Clubs with the new regulations. These included:
1. The provision of security. The Chinese regulations require the provision of security by a domestic company i.e. a Chinese bank or insurer. This will cause unnecessary expense and delay (perhaps 3-4 days) as compared to the provision of the long recognised and accepted Club guarantee which can be provided round the clock.
2. The IG have been working with the MSA on the clean-up response contract. There are few problems with the framework of the contract in general but there is still work to be done on termination provisions, e.g. where a shipowner reaches his financial limit or is unhappy with the SPRO services; also insurance provisions to make sure both the shipowner and SPRO have adequate cover.
3. The authority to sign the clean up contract – as this can only be signed by a company or individual domiciled in China.
4. The fee structure, whereby the retainer fee is in the order of 10 times higher than that established in the US with the OSRO set-up. He would prefer to see a lower retainer designed to cover maintenance and training rather than the bulk of the capital costs for the SPROS, with the bulk of fees charged for the actual response services and for other ancillary works. This would follow the pattern elsewhere.
5. Timetable. The regulations have been in force since 1 March 2010 and require SPRO contracts to be in place by 1 January 2012, leaving just six weeks for shipowners to contract with the relevant SPRO in whichever region he is trading. This is a very tight timetable given that there is as yet no list of approved contractors. Mr Williams called for a common-sense approach to compliance in this regard.
China Shipping (CS) Tanker’s Deputy Manager, Capt. Mei, also told of his concern in relation to the retainer fees that are being established by the contractors and their representative bodies.
The spill response contractors were represented by Professor Gao Jie who explained that the organisation of contractors, CACEM, had been working hard to establish a standardised, indicative fee system. He noted specifically that the efforts of CACEM are in line with China’s anti-monopolies regulations, although some delegates suggested a free-market set-up from the start would be more appropriate.
The seminar was useful in bringing together the CMSA, the International Tanker Owners Pollution Federation (ITOPF), the International Group of P&I Clubs (IG), the ship owners and the spill contractors, but left the delegates with a growing feeling of anxiety of how the legislation would finally look and be implemented, particularly the hefty retainer fees that were likely to be required by the CMSA-authorised contractors.
The IG and ITOPF, along with the Chinese Shipowners Association, met with the CMSA on Thursday 17 November to go through the ship owner and P&I club concerns. Developments from this meeting will be circulated to INTERTANKO Members separately.
Presentation slides from this event will be available from the ITOPF website directly