Date:31/05/2006 URL: http://www.thehindubusinessline.com/2006/05/31/stories/2006053102430700.htm

Back SCI jt venture proposal with ONGC in limbo?

Santanu Sanyal

May have to renegotiate deal with new ONGC chief

The proposed venture is supposed to undertake various offshore logistics operations.

Kolkata , May 30

With the exit of Mr Subir Raha from Oil and Natural Gas Corporation (ONGC), the fate of the ONGC-SCI joint venture, it seems, has become somewhat uncertain. Perhaps SCI (Shipping Corporation of India), which mooted the proposal for the joint venture, may have to renegotiate the details of the proposal, according to informed sources.

The SCI Chairman and the new ONGC Chairman are to discuss the proposal, among other things, shortly.

Initially it was decided that there would be three partners for the proposed joint venture — SCI and ONGC, each holding 24.5 per cent equity stake, and the Port of Singapore Authority (PSA), around 21 per cent, with balance 30 per cent going to financial institutions and mutual funds.

Subsequently, however, PSA, it is learnt, decided to withdraw. There was therefore a move to locate a new partner, either Indian or foreign, or both.

Jt venture operations

The proposed ONGC-SCI joint venture is supposed to undertake various offshore logistics operations including the operation of rigs, platforms, floating storage system, offshore supply vessels and construction of pipelines, both onland and submersible and various other operations.

It might be noted that SCI operates for ONGC as many as 31 offshore supply vessels (OSVs) and multi-support vessels (MSVs).

Reports have it that SCI has been planning to float several other joint ventures as a means to achieve faster growth.

Other proposals

Thus, there is a proposal to have a crude tanker subsidiary with Hindustan Petroleum Corporation, the public sector oil refining and marketing company, a chemical tanker subsidiary with Shapoorji, a Mumbai-based private business group, and a bulk carrier joint venture with a leading Japanese builder.

However, all these proposals are believed to be progressing at a snail's pace.

Since SCI is in the Mini-Ratna category, its board is supposed to have the financial powers to decide on investment proposals up to $100 million in an Indian joint venture and up to $10 million in a foreign joint venture.

It is now learnt that the power is not absolute. Which means, SCI has to go through various official formalities entailing delay.

The proposals to acquire six LR I (70,000 dwt each) and two LRII (100,000 dwt each ) tankers have been lying with the Government for quite some time.