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P. Manoj

New Delhi , July 15

THE state-owned Shipping Corporation of India (SCI) has struck a deal with Korean Exim Bank and ANZ Investment Bank to raise $104.32 million to help finance the acquisition of two new very large crude carriers (VLCCs) of 3,00,000 dead weight tonnes (dwt) each.

Of the total external commercial borrowings, $70 million (about 70 per cent of the loan) was provided by Korean Exim Bank while the balance $34.32 million was contributed by ANZ Investment Bank.

"The loans were raised at fine competitive rates. The loan documents were signed between SCI and the lenders on July 8," a Shipping Ministry official said. The loan has to be repaid in 34 quarterly instalments after the vessels are delivered.

The interest rate on the Korean Exim Bank loan is linked to the Commercial Interest Reference Rate (CIRR) fixed by the Korean Government bank on the 15th of every month.

At $65.2 million per vessel, the total acquisition cost of the two large crude tankers comes to $130.4 million. Apart from the overseas borrowings, SCI chipped in with $26.08 million from its internal resources to fund the acquisition.

The first of the two VLCCs, currently under construction at the shipyard of South Korea's Hyundai Heavy Industries (HHI), will join SCI's fleet in February/March 2005 and the second tanker would be delivered in September/October 2005.

The largest domestic shipping company, which notched up a net profit of Rs 626.99 crore during 2003-04, is also looking at buying two more new VLCCs of 3,00,000 dwt each. "The proposal for buying two more VLCCs will be considered by the SCI board later this month," the official said.

Domestic oil importers such as Indian Oil Corporation, Hindustan Petroleum Corporation Ltd, Bharat Petroleum Corporation Ltd and Reliance Industries Ltd are now increasingly resorting to VLCCs to haul their crude cargoes to achieve economies of scale since larger quantities can be transported at a time, leading to savings in freight bill. Typically, a VLCC can load two million barrels of crude, which is roughly Kuwait's daily oil production.

Besides SCI, private shipping firms such as Great Eastern Shipping Company Ltd, Essar Shipping Ltd and Mercator Lines have recently added second-hand VLCCs to their fleet.

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