IMO 2020 – an update on the position in South Africa

As 1 January 2020 approaches the number of articles and memoranda published in relation to “IMO 2020” proliferates. Reference to IMO 2020 is of course to the implementation of Annex VI to the International Convention for the Prevention of Pollution from Ships (“MARPOL”) which regulates, inter alia, the maximum permissible concentration of sulphur in fuel oil with a view to reducing the consequences of air pollution from vessels.  As at 1 January 2020 this will be reduced to a maximum of 0,5% m/m.

There are various methods by which shipowners and operators can achieve compliance.  One is to utilise low sulphur fuel, and another is to fit an exhaust gas cleaning system or ‘scrubber’. 

The effect of IMO 2020’s implementation will be felt across the board as freight rates will invariably rise to take into account either the increased cost of low sulphur fuel, which according to various sources could (at least initially) be in the region of US$200 per metric tonne more than high sulphur fuel,  or the amortisation of scrubbers – the cost of procurement and installation which is estimated to be between US$3 million to US$5 million, depending on the requisite configuration.

As a signatory to MARPOL and having acceded to Annex VI, South Africa is obliged to enforce its provisions. This would include the monitoring of vessels to ensure compliance, reporting non-compliance to the relevant flag state (or “Administration”), the provision of low sulphur fuel as well as the provision of shore-based facilities to receive exhaust gas cleaning residues. Many port states have also introduced penal provisions as a deterrent to shipowners and operator’s non-compliance.

The South African Maritime Safety Authority (“SAMSA”) is tasked with the administration of MARPOL through the Marine Pollution (Prevention of Pollution from Ships) Act, 2 of 1986 (“the Act”). For SAMSA to enforce Annex VI enabling legislation is required to be promulgated.  This legislation would also permit the imposition of penal sanctions by SAMSA for non-compliance. The authorities, in this instance the Department of Transport (“DOT”), have assured various stakeholders that the requisite legislation will be promulgated timeously, however at this stage an amending bill to MARPOL has yet to be tabled.  With only 14 working weeks remaining our Parliament may be hard pressed to give effect to the necessary legislation, particularly in circumstances where, as recently reported in the online publication Safety at Sea, SAMSA have indicated that our authorities may be looking to ban the use of all types of scrubbers in South African waters. The regulations to Annex VI permit the use of scrubbers and, as stated above, member states are required to provide facilities to receive exhaust gas cleaning residues.  If South Africa is to depart from the terms of Annex VI it will have to provide a rational basis for doing so. This would probably require engagement with relevant stakeholders, which could further delay matters.

The apparent volte-face by the South African authorities may have been prompted by certain states, most notably Singapore, banning the operation of open loop scrubbers in its waters. This is due to concerns that the discharge of residues into the ocean from these types of systems may adversely affect the environment.  There is no empirical study which supports this contention. Vessels using open loop scrubbers would, in these circumstances, be required to switch over to compliant (low sulphur) fuel, which although may have technical, and accordingly cost implications, is achievable.   

To place the above in context, Tradewinds have reported, based on research undertaken by Clarkson Research Services, that by end 2020 15% of the world’s merchant fleet will be fitted with scrubbers.  Notably, in respect of container vessels, this constituted, or would constitute, 35,7% of the global TEU capacity.

There does not appear to be any rational basis for the banning of closed loop scrubbers (where residues are retained on board) and so perhaps the remarks by SAMSA relate only to open loop scrubbers, but no doubt this will be clarified by them in due course.  

Until such time as South Africa promulgates the necessary enabling legislation SAMSA will not be in a position to enforce the provisions of Annex VI or any proposed ban on the use of scrubbers.  SAMSA may however be able to give some effect to the provisions of Annex VI by reporting any violation to the Flag State which is required, in terms of regulation 11 thereto, to take appropriate steps against the offending vessel and report to the Port State the outcome of such investigations and any action taken pursuant thereto.

Notably, failure to promulgate the necessary legislation will not absolve South Africa of its obligations under Annex VI, including the provision of low sulphur fuels and reception facilities for exhaust gas cleaning residues.