SCI, domestic oil majors in JV talks

Shipping Corporation of India (SCI) is in talks with domestic oil majors for setting up joint ventures for ferrying incremental tonnage, arising apart from the contract of affreightment (COA).

COA is the contract for ferrying crude for oil majors while incremental tonnage is freight movement required apart from contract specifications.

The company is also in dialogue with international owners of tankers and bulk carriers. Confirming the development, SCI Chairman and Managing Director S Hajara said, "SCI has identified joint ventures as the parallel route of growth for the company. Nothing has been finalised yet." Hajara declined to divulge further details.

Industry sources said crude oil requirements are shooting up owing to increased refining capacities. Oil companies such as IOC, HPCL and BPCL would be required to ferry more crude.

"With the proposed joint venture, the oil majors would get shipping expertise while SCI would get assured business. Though joint venture model is not profitable for SCI, this would be the best option as vessel acquisition is delayed due to long government procedures," an analyst said.

SCI has requested the government for extending a block approval for acquiring 28 vessels at an indicative price of Rs 5,948 crore. A senior government official said the finance ministry is reluctant to give block approval as the price of vessels at the time of acquisition would be different.

However, SCI executives said they would accept 10 to 20 per cent flexibility in indicative prices at the time of vessel acquisition.

Analysts feel 2002 and 2003 were the years appropriate for giving orders for vessels. "SCI has wasted two years on divestment of the government's stake in the company. Now joint ventures will ensure sufficient vessels with assured business through tie-ups," one of them said.

SCI has also signed an MoU with ONGC to form a non-PSU joint venture company for offshore marine services. In the proposed JV, ONGC and SCI would hold 24.5 per cent stake each as principal promoters.

An overseas offshore supply vessels construction company also would be roped in which would hold 21 per cent stake and the remaining 30 per cent would be held by Indian or overseas financial institutions.

Though it is a PSU, SCI currently has invested in four joint ventures including Irano Hind Shipping Company. Irano Hind is a 49:51 joint venture between SCI and the Islamic Republic of Iran Shipping Line set up in Teheran.

Earlier, SCI had floated three different joint ventures for the expansion of Petronet LNG project and the partners included Mitsui OSK Lines, Japan, Nippon Yusen Kabushiki Kaisha and Kawasaki Kisen Kaisha.