Shanghai-based shipping company China Merchants Energy Shipping Co., Ltd (CMES) has received a financial package as part of the Chinese government’s scrapping subsidy program, the company said in a Shanghai Stock Exchange filing.
Namely, the shipping firm received an amount of some RMB 763.4 million (USD 116 million) in scrap-and-build subsidies.
CMES added that the funds, secured on June 16, will be categorised as non-operating income in the company’s 2016 financial results.
The ship scrapping subsidy program, which was launched in 2013, was initially set to expire last year, however, China extended it until 2017.
Under the program, shipping companies are encouraged to demolish older vessels with the aim of cutting vessel overcapacity and modernizing their fleets with modern eco-friendlier counterparts.
The subsidies of RMB1,500 per gross tonne for scrapping older tonnage have proved to be a much needed lifeline for the country’s shipping companies such as China COSCO and China Shipping Development that managed to stay profitable in 2014.
World Maritime News Staff