SCI seeks block approval

In a development that could significantly shore up the fortunes of Shipping Corporation of India (SCI), the Ministry of Shipping has initiated a move to provide block approval to the company’s $1 billion acquisition plan involving 14 new vessels, including VLCCs, two container vessels and six 65,000DWT product tankers.

The proposed block approval concept, which will be a kind of a single-window clearance, will involve setting up of an empowered committee, having representatives of all Ministries and agencies that have to clear such an acquisition plan. This move is intended to help SCI, which has not been able to make any major acquisitions due to earlier government restrictions, to cash in on the healthy freight market. The block approval proposal will not cover the two proposed cape-size vessels that have already received the PIB clearance.

Although sitting on bulging cash reserves, the company has not been able to make any significant purchases due to the earlier government restrictions. Even now, SCI is hamstrung in acquiring ships, as it faces considerable delay in getting the final Government approval for the purchase in a market that is given to sharp fluctuations in prices. To make matters worse for the company, it generally does not go in for second-hand vessels, as it may come under CBI or CAG microscope.

Once the block approval is through, the company will be able to purchase the 14 vessels as and when it desires, depending on the prevailing market conditions. As of now, however, it will face problems as all the major shipbuilding yards around the world are booked up to 2007-08.