The proposal has been brought to the Cabinet by the ministry of shipping (MoS) in light of the pending SCI privatisation. But the proposal has not found much favour with the ministry of finance (MoF). The MoF has questioned the reasonableness of the price.
The MoS, however, is of the opinion that owing to the uncertainties of this joint venture, the price MOL has agreed to pay is a good one. The MoS wants SCI to exist from the joint venture because continuation will require additional funds, about $30 million, and this will be difficult since the company is awaiting privatisation.
The government had approved $11 million investment in GHCL in December 1999. Apart from MOL and SCI, the third partner was Atlantic Commercial Finance Co, an affiliate of Enron for transportation of liquefied natural gas (LNG) for Dabhol Power Company.
The LNG tanker, SS Lakshmi, was built for GHCL and delivered by Mitsui Heavy Industries in January 2001. However, the DPC project failed and now the tanker is used by Oman LNG.
The lenders to GHCL, led by ANZ Investment Bank, foreclosed the loan because of the uncertainty of the project. According to the MoS, SCI will be able to get back its $11 million along with the interest.
Further, the MoS feels that SCIs involvement in GHCL has not been fruitless, since the company has received considerable experience in ship-building activity for LNG tanker and also on-board operational experience in LNG shipping.