Gesco, Varun Shipping may be roped in to lug LPG

Friday, December 26 1997

Gesco, Varun Shipping may be roped in to lug LPG

OUR INFRASTRUCTURE BUREAU

MUMBAI, December 25: The Shipping Corporation of India (SCI) is planning to join hands with the Great Eastern Shipping Company (Gesco) and Varun Shipping for moving liquified petroleum gas (LPG) cargo.

According to company sources, a decision is expected in the coming months. "The pool will help us to project a united front before the Oil Co-ordination Committee (OCC) and lend us more bargaining powers," they said.

"The companies will also stand to gain as the pooling will eliminate the undercutting of freight rates", sources added. Gesco and Varun, with two LPG carriers each, are relatively new entrants in the liquid-cargo sector, compared with SCI which has been in the field for quite some time.

SCI operates five specialised vessels comprising two LPG/ammonia carriers and three phosphoric-acid carriers. Last fiscal, LPG vessels of SCI carried 0.298 million metric tonne of LPG.

With the dry-bulk market on the downswing, the companies are seriously looking at the LPG sector for making up loss, sources said. Even SCI, it is learnt, is planning to add more LPG carriers under its Ninth plan to acquire 44 vessels.

Speaking to newspersons here on Wednesday, SCI chairman and managing director PK Srivastava said that the current acquisition plan to acquire 17 vessels had been hit badly by the economic turmoil in southeast Asian nations, particularly in South Korea.

The company acquired only seven vessels, including placing orders with two Korean shipyards as against the projected number of 12 ships. While the delivery of two product tankers from Hyundai Heavy Industries of Korea is scheduled to be made by the end of 1998, the other Korean company, Halla Engineering and Heavy Industries, has gone bankrupt.

SCI has placed orders for acquiring two Aframax crude-oil tankers with Halla at a cost of $42 million each. To part finance the project, the company had also planned to go in for a $100-million external commercial borrowings, which was shelved as the agreement with Halla was not re-affirmed. "A global tender has been floated again for getting the tankers," said SCI chairman and managing director, adding that the acquisition plan would be delayed by around seven months.