Post privatisation, government can requisition SCI vessels during war or a national emergency: Shipping minister

P Manoj Mumbai | Updated on December 12, 2019

The government will retain the right to utilise the ships of a privatised Shipping Corporation of India (SCI) in times of war or a national emergency, the Minister of State (independent charge) for Shipping, Mansukh Mandaviya, told Parliament on Thursday.

“The Government can requisition any Indian asset, including Indian ships, during a war or national emergency,” Mandaviya said in a written response to a question raised by Mimi Chakraborty (Trinamool Congress) and Shanmuga Sundaram K (DMK).

The two law makers sought to know “whether the Government has taken any steps to utilise the ships in a war or national emergency, after the sale of SCI”.

The Director-General of Shipping, Mandaviya said, has the “power to issue directions to ships registered under the Merchant Shipping Act or licensed under the Merchant Shipping Act in the public interest or in the interest of Indian shipping, to proceed for any particular purpose”.

SCI stake sale

The government has decided to sell its 63.75 per cent stake in SCI, India’s biggest ocean carrier by fleet size, to a private strategic buyer and the stake sale is in process, Mandaviya added.

The Mumbai-based fleet owner runs 60 ships that include crude oil tankers, very large crude carriers, petroleum product carriers, liquefied petroleum gas carriers, bulk carriers, container ships and off-shore support vessels. These ships have a combined gross tonnage (GT) of 3.02 million and account for a third of India’s shipping tonnage (capacity).

State-owned SCI was the only Indian shipping company to sail to Iran to lift crude oil during the Gulf war in the early 1990s, when other Indian private shipping companies shied away from venturing into the strife torn area.

Shipping industry experts said incorporating a clause that requires a privatised SCI to deploy ships at the disposal of the government during a war and national emergency, could depress bidder interest.

“Any investor will think twice if such a clause is written into the share sale and purchase agreement,” said Santhakumar Pai, Vice-President, Chartering and Business Development, at Dubai-based CPC Corporation Ltd.

“For a foreign investor, this clause could restrict the use of ships. Besides, assets are not effectively at the disposal of the owner. Typically, in shipping, owners place ships on charter wherein crew and technical management can be outsourced to third parties that are, for instance, based in Mumbai and controlled from Singapore,” Santhakumar added.

Published on December 12, 2019

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