Great Eastern Shipping is sounding a little disillusioned with scrubber economics after the price differential between high-sulphur and low-sulphur fuels tightened up.
The largest private Indian vessel owner is pressing on with all but one scheduled retrofit of the exhaust cleaning systems however.
Chief financial officer G Shivakumar told analysts the company had already installed scrubbers on an aframax and an LR1 tanker last year.
He said these are "working satisfactorily".
"So no issues with those," he said.
The CFO revealed retrofits on four suezmaxes were scheduled for between September and December last year, but the booming freight market led it to postpone these.
"Then we were going to do it in first quarter of this year, but because of the lockdown in China, the yards were not working, we couldn't do it. So we are going to do those four suezmaxes," he added.
"We had another scrubber which was going to be done either on a gas carrier or an aframax. We have decided not to do that."
Shivakumar said the first of the suezmaxes will go into dry dock this month.
'Not as good as planned'
He said it had been "disappointing" watching the spread between high and low-sulphur fuels shrinking, taking away a large part of the advantage of fitting a scrubber in the first place.
Great Eastern sees the price difference as "probably $60 or $70" per tonne in Singapore.
The CFO added that this spread "is not a great number and doesn't give you a payback on your scrubber. But we will go ahead with it".
"It's not likely that it will stay this way forever," Shivakumar added.
Forward prices show the spread should widen to between $100 and $110 per tonne.
"So with those numbers, you get back your capital at least and maybe a small positive return," he said.
"The projects are obviously not going to be as good as we had originally envisaged."
Great Eastern has already paid more than 50% of the retrofit costs, leaving it with another $10m outstanding.
Debt going down
Turning to its debt levels, Shivakumar said the group had paid off $180m of debt in its financial year to 31 March.
"And we've ended with pretty much the same cash balance that we started the year with," he added.
"So it's been a good year for deleveraging the balance sheet and creating future capacity for capex when the opportunities come. And we are quite happy with the way the year has gone."
Great Eastern began April 2019 with $500m in cash. Debt is now $560m.
