Santanu Sanyal

First time public sector shipping line opting for resale tender route

Kolkata , March 23

Shipping Corporation of India has received several offers ("more than seven", according to sources close to the shipping line) from international ship-brokers in response to the resale tender it floated in the first week of this month to acquire a Capesize bulk carrier (capacity 1,70,000 dwt). This is for the first time the public sector shipping line has opted for a resale tender route for the acquisition of a vessel.

An SCI committee will now shortlist the offers, prioritise them depending on the suitability and arrange for inspection of the vessel. Once the inspection has been concluded, the negotiations on price will start. "We would like to close the deal within three months," observe the sources.

Vessels conditions

The shipping companies having vessels under construction in various yards but now reluctant to take delivery of them for whatever reasons normally respond to resale tenders through brokers. In such cases, the delivery time of the vessel is most crucial. The vessels due for early delivery are generally preferred.

For SCI, the compulsion to go for the resale tender route is understandable. While it is keen to acquire two Capesize bulk carriers as early as possible, it finds most yards reluctant to accept orders for several reasons.

In the world ship-building industry, tankers and LNG ships are the current flavour of the season, not bulk carriers.

Current status

Hyundai Heavy Industries, the world's largest shipbuilder, delivered the last bulk carrier in early 2004 and has not accepted any order for a bulk carrier since. Also, most yards are overbooked till 2009. There is another point.

SCI is finding the cost of new building quite high. Some of the yards are quoting upwards of $72 million, much higher than expected.

It might be noted that SCI has a massive acquisition plan covering bulk-carriers, tankers and various other vessels. However, the plan is not making much headway. Except the two very large crude carriers (VLCCs, 3,18,000 dwt each) now under construction at a Korean yard and due for delivery in 2008/09, the public sector shipping line does not have at present any other vessel under construction in any yard.

SCI fleet

The present SCI fleet consists of only two VLCCs, "Desh Ujala" and Desh Vaibav", each of 3,16,000 dwt, acquired a few months ago.

Although the government is unlikely to cough up funds for the proposed acquisition, the shipping line being a state-owned company will be required to get approvals from the authorities concerned in the government. There is a move to secure block approvals for several vessels at a time. The Finance Ministry is believed to be well disposed towards the idea but the PIB clearance is still awaited.

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