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Cosco gets $638m subsidy for fleet renewal

Cosco gets $638m subsidy for fleet renewal
State-owned shipping conglomerate China Cosco Group announced that it has received RMB3.96bn ($637.8m) in subsidy from its ship disposal and newbuilding activities.

Cosco said the latest government grant would help to offset the negative impact from the low earnings of the shipping business, marked by weak freight rates and high operating costs.

The subsidies were received by Cosco on 30 June 2015. The brief statement by Cosco, however, did not mention the period of the ship scrapping and newbuilding activities covered by the subsidy.

The government subsidies were handed out as part of Beijing’s policy that encourages owners to demolish old vessels and build new ones to replace them, so as to enhance the country’s overall fleet efficiency.

Last month, China’s ministry of transport extended the deadline for this scrap-and-build policy to end-2017 from end-2015.

Meanwhile, China’s National Audit Office announced earlier that Cosco was found to have falsified its earnings by under-reporting the revenue, expenditures and profit during the years from 2008 to 2013.

The corrupted activities at the state-owned shipping enterprise will be further investigated by the relevant authorities, the audit office said.