Your paper on Tuesday headlined one outrage aspect of the above scandal. Others have been commenting over the past months some uncomfortable dealings of the STC highlighted in the Insight Forensics Report. The new Minister for Commerce could only assure Parliament that a committee of officials will study the report – the very persons who led us to this debacle.

The contract between STC and Betamax for the transportation of petroleum products contains clauses inimical to the interest of the country. For example, Clause 6.2 of the COA deals with ‘Hire of Freight Capacity’ whereby during each contract year (the contract is for 15 years!), STC undertakes to hire and pay 100% of the freight capacity. Clause 6.5.8 refers to the Aggregate Freight Amount of US $ 17.6 million per contract year.

This rate is subject to escalation clause over the 15-year-period.

How could STC agree to guarantee the annual payment of US $ 17.6 million for a tanker costing US $ 58 million according to the BDO-DCDM Report ? Such an arrangement is tantamount to project financing of the tanker by STC – a  suggestion firmly rejected by the Ministry of Finance and the State Law Office.

The more scurrilous aspect of this arrangement appears when daily freight charges of the Betamax tanker, an LR1 type, is calculated to be US $ 48,000 (US $ 17.6 million divided by 365 days). This is grossly indecent (for want of a better term) when the ongoing rate is US $ 16,500 per day. For reference, Galbraith’s Time Charter Report, a specialist in oil tanker brokerage, in its 1st July 2011 edition, refers to Petrobas extending time-charters on two LR1 for three years at US $ 16,500 per day, a premium rate in the current market. Other LR1 vessels 2008 built tankers, go at US $ 15,000 – 16,000 per day depending on the contract period.

Referring to Arab uprising and its people’s thirst for justice and transparency, Aung San Sui Kyi in the 2011 Reith Lecture, last week, on ‘Securing Freedom’, reflects that the straw that broke the camel’s back became intolerable because the animal had caught a glimpse of itself in a mirror the realization dawned that the burden it was bearing was of an unacceptable magnitude and its collapse was a refusal to continue bearing so oppressive a load. After the hedging saga piles the excessive freight scandal – can our road users have a glimpse in a mirror and refuse to bear such a heavy burden ?