TORM Sets Up Scrubber JV with ME Production and GSI
Danish shipping company TORM has established a joint venture with scrubber manufacturer ME Production and Guangzhou Shipyard International (GSI), which is part of the China State Shipbuilding Corporation group.
The joint venture, ME Production China, will manufacture and install scrubbers in China intended for both newbuildings and retrofitted vessels. TORM holds an ownership stake of 27.5% in the new joint venture.
The move is being pursued amid anticipated demand for scrubbers due to the upcoming 2020 sulphur cap.
“Our long-standing relationships with GSI and ME Production helped to facilitate this unique joint venture at a time when demand for scrubbers is expected to increase significantly. This strategic move provides us with a substantial economic interest in a venture that has the potential to be a large-scale international scrubber manufacturer. It will also result in TORM obtaining attractive prices for the scrubber investments that already have a short payback time,” Executive Director of TORM Jacob Meldgaard, said.
TORM has ordered a total of 16 scrubbers with ME Production China and signed a letter of intent for additional 18 scrubbers with the new joint venture.
With these orders, TORM has committed to install scrubbers on 21 vessels and potentially up to 39 vessels or roughly half of TORM’s fleet. The CAPEX related to the confirmed scrubber orders is on average estimated below USD 2 million per scrubber including installation costs.
TORM expects to be able to obtain financing for a significant portion of this investment.