MUMBAI, December 25: The Shipping Corporation of India (SCI) plans to enter into a joint venture with the state-run Rashtriya Chemicals & Fertilisers (RCF). Under the terms of the agreement, SCI will transport fertiliser, urea and liquid cargo imported by RCF.

A joint committee was constituted last month to go into the various options for the venture, said chairman and managing director PK Srivastava. It is expected to submit its report by January-end.

Three proposals are under the consideration of the committee. According to the first, SCI will enter into a contract of affreightment (COA) for moving around one metric tonne (MT) of RCF cargo. Under the contract, a gross freight rate will be quoted that is linked to the fluctuations with the on-going market rates.

The second proposal entails incorporating a new company where SCI and RCF will have 50:50 equity. The venture will have to buy around three second-hand vessels (around 10 years) of 30,000 DWT size, costing $3.5 million each.

The last option entails hiring SCI against a management fee. "SCI will manage the vessels, jointly acquired by the companies or belonging to SCI, and RCF will bear the cost," company sources said.

According to them, the venture plans with SCI will be extended to the 1.5 metric tonne urea plant of Rashtriya Chemicals & Fertilisers coming up at Oman in association with Kribhco. The plant is expected to go on stream by the year 2000.

If the joint venture talks between the companies materialise, a waiver may have to be sought from the ministry of surface transport (MoST). According to the present norms, all cargo of public sector units is chartered through the ministry's chartering arm, Transchart.

Transchart, in turn, allocates the cargo to public and private parties at the market rates.

"Since the venture involves two public sector undertakings , we don't foresee any problem in seeking a waiver from the ministry," Shipping Corporation sources said. Fertilisers being a seller's market, RCF will benefit if it supplies the product on time, sources say. The venture with SCI will help the fertiliser giant "control the logistics."

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.