Scrubber finance solution for shipowners

09 Mar 2015
The financing solution aims to ease the financial burden on ship owners seeking to install scrubber systems

The financing solution aims to ease the financial burden on ship owners seeking to install scrubber systems

Wärtsilä is teaming up with Clean Marine Energy Europe Ltd (CME) to provide a funding solution to help shipowners comply with sulphur emissions legislation through the use of exhaust gas cleaning technology.

The financing solution aims to ease the financial burden on ship owners seeking to install scrubber systems by enabling them to repay the cost of the scrubber system installation via a fuel adder, i.e. a fuel premium on the price of HFO by which the ship owner repays the cost of installing the scrubber.

Wärtsilä says this provides a return from the differential between Heavy Fuel Oil (HFO) and Marine Gasoil (MGO) for a period of four to six years, depending on price spreads.

"The shipping industry is faced with a number of environmental regulations right now, often with a significant capital burden. Despite lower fuel costs, there is an even greater spread between HFO and MGO; as much as 90% in some cases,” said Pace Ralli, co-founder and director, CME Europe. “This allows us to inject capital to pay for the installation of a scrubber, allow the ship owner some of the benefits of continuing to burn HFO and still take out a return.”

The new financing solution also means that shipowners do not have the burden of meeting the up-front capital expenditure, which is typically between US$3m and US$12m per vessel.

This investment is often difficult to pass on to charterers, but with the financing, CME says the fuel adder charge can be easily passed on until the scrubber system is paid for. The concept therefore minimises the impact on the owner's balance sheet, banking and security arrangements.

“In addition, the asset value improves, while the ship owner is compliant with new tighter ECA regulations. We see the CME solution as filling a gap in the financing of the latest scrubber technology,” Mr Ralli added.

CME and Wärtsilä can provide the financed installation and maintenance of a scrubber through CME's Emissions Compliance Service Agreement (ECSA).  

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