Government Likely To Approve SCI Transaction Document Next Week

New Delhi, January 28: | Updated: Jan 29 2003, 05:30am hrs
The government is likely to seal the transaction document for sale of Shipping Corporation of India (SCI) next week. Simultaneously, the SCI proposal to buy two very large crude carriers (VLCCs) will be put up for public investment boards (PIB) approval shortly.

Sources said a meeting of the Cabinet committee on disinvestment (CCD) was expected to approve the transaction documents next week. Following this a day will be given to the bidders to have a relook at the companys account books especially the second and the third quarter results.

The next stage will be to call for price bids from the four bidders who are left in the fray.

Sources said, The shipping ministry has forwarded a SCI proposal for purchase of two VLCCs costing over $60 million each for scheduling a PIB meeting.

Ministry officials said that once the PIB approval had been received the proposal would be put up for clearance from the Cabinet committee on economic affairs . It is likely to take at least a month, said an official.

VLCCs are important for any shipping company, which wants to be in the business of crude transportation because domestic oil companies prefer to engage these vessels. No Indian company presently owns a VLCC though they have other crude carriers like Suezmax and Aframax.

The government has been dithering over granting approval to SCI because the company has been put on the block for disinvestment. Besides, bidders are not very keen on SCI going ahead with VLCC purchase because whoever buys the government stake will like to make its own investment decision, said an official.

Among the bidders for SCI are the two domestic shipping companies Essar Shipping and Great Eastern Shipping besides Videocon and Sterlite. Great Eastern Shipping has made a public statement that it is not interested in buying SCI because of delay in the disinvestment process. However, it still has the option to put in a bid.

Whether the government approval for VLCC purchase comes first or disinvestment is yet not clear. But if disinvestment happens first, there will be no need for the government approval. In case it happens the other way round, the purchase decision can be reversed by the SCI board with the approval of government nominees if the new buyer was not interested in making the investment, said an official.