Naik nixes SCI nodal agency status

Petroleum Minister Ram Naik has shot down Disinvestment Minister Arun Shourie’s proposal on restoring nodal agency status to Shipping C...

Petroleum Minister Ram Naik has shot down Disinvestment Minister Arun Shourie’s proposal on restoring nodal agency status to Shipping Corporation of India (SCI) for transportation of crude oil. Shourie had sought the status for a period of two years after SCI privatisation.

The withdrawal of assured business from crude oil importers/refineries would affect SCI valuation as crude transportation is highly profitable and major business. The government is in the process of selling its majority stake in SCI to a strategic investor. SCI was the nodal agency for import of crude prior to dismantling of administered price mechanism.

In a letter to Shourie, dated February 14, Naik has linked the issue to disinvestment of HPCL and BPCL by stating that it will not be possible for the government to impose nodal agency status for SCI on these two companies after they are privatised.

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This leaves the government with only IOC for which Naik has said that he has no objection in extending purchase preference policy of the government to SCI if it takes part in tenders floated by oil companies.

When asked to comment on the move, Essar Shipping CEO and managing director Sanjay Mehta said: “We don’t think that nodal agency status is much of a issue. Nowhere in the world, the shipping companies, private or public, have any such status. No buyer as per me would give too much value to the nodal agency status.”

Essar Shipping is the only shipping company in the race for SCI after the withdrawal of Great Eastern. HPCL and BPCL have been importing on Suezmax and Aframax tankers.

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