The Hindu Business Line : PIB clears SCI tanker purchase plan

AFTER two aborted attempts, the Public Investment board (PIB) finally vetted and cleared on Wednesday the Shipping Corporation of India (SCI) plan to buy two new very large crude carriers (VLCCs) estimated to cost about Rs 650 crore.

As per the Government procedure for investments by PSUs, the PIB recommendations are put up to the Cabinet Committee on Economic Affairs (CCEA) for a final ratification.

But, in this case, the PIB approval to SCI for buying 2 VLCCs at a cost of $ 65.2 million per vessel from South Korean Hyundai Heavy Industries will have to wait for a couple of days before deciding on forwarding the proposal to the CCEA, officials involved in the exercise revealed.

During the PIB meeting, the Disinvestment Ministry officials are understood to have informed that the much-delayed disinvestment plan of SCI is expected to move swiftly.

Implicit in this statement is the fact that the core group of secretaries on disinvestment is slated to meet on March 7 to discuss and freeze the transaction documents for the privatisation of SCI. This will clear the decks for the Cabinet Committee on Disinvestment (CCD) to put its stamp of approval on the transaction documents and authorise the Disinvestment Ministry to call for financial bids from the short-listed bidders.

"If this happens, then the entire exercise of forwarding the VLCC acquisition plan to the CCEA becomes redundant,'' the official remarked.

But, if for some reason the outstanding issues relating to the transactions documents are not sorted out and the process is delayed further, the Shipping Ministry would be able to take the VLCC plan to the CCEA backed by the PIB clearance.

The price of $65.2 million per vessel quoted by Hyundai is considered very competitive in a market that has started firming up. Besides, the charter market for VLCCs is on the upswing buoyed by fears of military attack on Iraq by the US and the need for oil importing countries to store more oil.

The VLCC acquisition plan was earlier opposed by the Finance and Disinvestment Ministries when the company was in the process of being privatised.

But, with the disinvestment process getting delayed, it was decided to pursue both the plans simultaneously. "It was decided that the Government should fulfil all the statutory clearance for the VLCC proposal of SCI,'' the official said.

If the privatisation process fails to go through, then SCI can proceed with the plan of placing the new building orders with Hyundai. But, if the company is privatised, then it would be up to the new management to decide on the plan, the official said.

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