Monday, July 14, 2008

Sulpicio Lines has named the companies hired to conduct salvage operations for MV Princess of the Stars, the Philippines ferry that sank on June 21 during Typhoon Fengshen, leaving over 800 passengers dead.

The Department of Transportation and Communication (DOTC) had already set a deadline of this Tuesday to name the contractor who would recover the ship. Another important aspect is the separate recovery of chemicals on board, primarily the fuel and a 10-tonne shipment of the dangerous pesticide endosulfan by Del Monte.

The ship had also been carrying a number of other chemicals in smaller quantities, including metamedopus, carbofuran, niclosemide, and proptineb. All of the chemicals must be removed by order of the DOTC before the vessel is recovered. The chemical recovery is to be performed by Titan Salvage, an international firm owned by Florida’s Crowley Maritime Corporation and specialising in sunken and capsized ship recovery. Titan will co-operate with both Sulpicio and the DOTC, and expect the project to be completed within 60 days of the contract being signed.

Once the chemicals on board are removed then the ship itself can be recovered. Sulpicio has also named its contractor for this: Malayan Towage and Salvage Corporation (Salvtug). Salvtug has accepted the contract, but warned that its estimated operation cost is PHP2.25 billion to P4.5 billion, which is roughly equivalent to US$50 million to $100 million. Sulpicio had previously estimated that this exercise would cost P600 million.

The high cost is a potential problem as it is unclear who will pay. Sulpicio’s insurance does not cover salvage. Had Sulpicio been covered with protection and indemnity (P&I) insurance this would have been covered, but this is not required in the Philippines and so Sulpicio’s insurance agreement with Oriental Assurance Corporation only covered the hull, machinery and third-party injuries and damage.

It is likely that Sulpicio will pay for the recovery of the ferry, which has a gross weight of 23,824 tons, but as the ship poses a potential environmental hazard it has been suggested that the government should pay the costs initially to ensure work is done quickly, with Sulpicio to be charged later for this. However, for now it is unclear who will pay for the vessel’s recovery.