The uncertainty over the divestment of Shipping Corporation of India has cast a shadow over its expansion plans.
The corporation, which has already been hit by the withdrawal of nodal agency status since April this year, now finds that it cannot arm itself adequately to face the situation.
The divestment delay has resulted in the government not taking a decision about SCI's Rs 650 crore (Rs 6.5 billion) expansion plan, entailing the purchase of two very large crude carriers of 3,00,000 dead-weight tonne each.
Since SCI enjoys a mini navratna status the board can take a decision on investments up to Rs 3,000 crore (Rs 3 billion) only.
Further investments have to be approved by the Public Investment Board and subsequently by the Cabinet Committee on Economic Affairs.
Confirming the development sources in the Union ministry of shipping said, Due to the prevailing uncertainty over the divestment, the government is yet to give the go-ahead for SCI's plan. A decision on this issue is not an immediate priority.
SCI CMD P K Srivastava was unavailable for immediate
After the withdrawal of the nodal agency status, the public sector oil companies are free to choose shipping companies for importing their requirements without offering the first right of refusal to SCI. The oil companies prefer to use VLCCs.
The SCI fleet consists predominantly of tankers and these will in the long run diminish in importance.
In the absence of VLCCs, a major part of India's crude imports will be handled by foreign shipping lines.
The uncertainty clouding the divestment has already resulted in one company, GE Shipping, putting its plans to acquire SCI on hold for the time being.
The government, which owns a stake of about 80 per cent in SCI, plans to dilute it to about 26 per cent by offering 51 per cent stake to a partner and another 3 per cent to employees.
Further, the strategic partner will have to make an open offer for an additional 20 per cent stake.
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