SCI Likely To Buy 2 VLCCs For $160-m

Mumbai, July 25 | Updated: Jul 26 2004, 06:03am hrs
Having got out of the divestment ring, Shipping Corporation of India (SCI) is considering placing an order for two very large crude carriers (VLCCs) at its board meeting early next week. The price tag for the two VLCCs is estimated at around $80 million each in the international shipyards, which means the total SCI investment would be around $160 million or Rs 740 crore.

The board meeting, scheduled for Tuesday, may also consider placing an order for one dry bulk capesize vessel.

SCI chairman and managing director PK Srivastava confirmed the development to FE, but declined to state the price tag for the two VLCCs.

The two VLCCs ordered last year carried a price tag of $65 million each. Prices of crude carriers have been buoyant following the IMO (International Maritime Organisation) regulations to scrap single hull vessels which in turn have resulted in shipyards worldwide having their order books full till 2007. The 12-year high and low prices for new building VLCCs are $105 million and $65 million while prices for a 10-year old VLCC varies between $35-50 million.

SCI had earlier placed order for two VLCCs in early 2003, to be delivered in January and September next year. The two new VLCCs in the fleet would take its VLCC tally to four.

In the last few months, Indian shipping companies have been on a VLCCs acquisition spree. Mercator Lines, GE Shipping and Essar Shipping have acquired second-hand VLCCs through the market. Currently, there are four VLCCs under the Indian flag and the SCIs fleet of four VLCC which will be inducted over the next 2-4 years will enable Indian shipping companies to participate in the crude transporation on the west coast of India by Indian Oil Corporation and Reliance Industries. The two refineries import crude through 15 VLCC parcels in a month.

SCI, however, has to undergo a set of approvals from the shipping ministry and public investment board (PIB) to place orders for these vessels which may take 6-8 months. Funding for these vessels would largely be through debt which will account for 70-80 per cent while the rest would be from internal resources, sources said.