Divestment Minister Arun Shourie is believed to have given his approval to acquisition of two new very large crude carriers by Shipping Corporation of India in view of existing uncertainty over divestment of SCI.

"Given the existing uncertainty with regard to the divestment of SCI, this (divestment) ministry supports the proposal (to acquire two VLCC)," Shourie's ministry has communicated to finance ministry which is likely to vet the proposal on Thursday.

With the privatisation of SCI in the final stages, both the ministries of divestment and finance had earlier opposed the VLCC acquisition plan of the company, which is estimated to cost about Rs 650 crore (Rs 6.50 billion), official sources said.

The finance ministry has convened a meeting of the Public Investment Board on Thursday to consider SCI's proposal to acquire two VLCC from South Korean Hyundai Heavy Industries at a cost of $65.2 million per vessel.

Sources said divestment ministry had earlier opposed the acquisition as it felt the decision to make such huge investment should be left to the strategic investor.

Shourie's change of heart follows Petroleum Minister Ram Naik's refusal to extend nodal agency status of SCI for transportation of crude oil for a period of two years post its privatisation, they said

Only two firms, including Essar Shipping, are left in race for buying the government's 51 per cent stake in SCI.

Transaction documents for the SCI sale have been frozen and the government was suppose to invite price bids shortly. With privatisation of SCI getting delayed, shipping ministry had approached finance ministry for statutory clearances for the VLCC deal so as to avoid delays in placing the order for new vessels irrespective of whether the company is divested or not, sources said.

Arguing that that $65.2 million per vessel was a ‘very competitive' price, it opined that Hyundai would not be able to hold on to its bid price for an indefinite period.

After PIB clears the proposal of SCI to acquire two vessels of 300,000 dead weight tonnes each on Thursday, it would go to the Cabinet Committee on Economic Affairs.

Presently, SCI does not own a single VLCC and Hyundai was likely to make delivery of first vessel in 24 months from the date of placing the order, they said adding SCI would place an order for construction of VLCC after CCEA approval.

The acquisition would enable SCI to meet the crude cargo transportation requirements of Indian Oil Corporation and Reliance Industries Ltd that are currently ferrying their crude imports from the Persian Gulf on VLCCs to achieve economies of scale as larger quantities can be transported at a time, sources said.

On an average, about 6-7 VLCCs parcels come in a month for Reliance and about 2-3 for IOC.