The government on Monday informed that the European Union ban on single hull oil tankers of over 23 years of age would not impact privatisation-bound Shipping Corporation of India.

"SCI has eight single hull crude oil tankers which are over 23 years of age, out of which two are on storage duty of ONGC and British Gas. The other six tankers are operating between Persian Gulf-India and on the Indian coast. Hence, there is no impact of this decision on SCI's tanker fleet," Minister of State for Shipping Dilip Kumar Gandhi said in a written reply in the Rajya Sabha.

The EU ban on single hull oil tankers of over 23 years of age carrying crude oil or fuel oil is expected to come into force on July 1, 2003.

Gandhi said the government has decided to permit foreign participation without any ceiling in the strategic sale of SCI. This is in line with the FDI policy in the shipping sector.

"Consequently, fresh expressions of interest for the strategic sale of 51 per cent equity in SCI will be invited," he said.

SCI, which posted a net profit of Rs 241.56 crore (Rs 2.415 billion) in 2001-02, has a net worth of Rs 2095.59 crore (Rs 20.955 billion), he added.

Govt may draw special dividend from SCI before sale

The government has indicated that it may draw special dividend from Shipping Corporation of India before its divestment, with Divestment Minister Arun Shourie saying it would be examined to ensure that bidders don't eye the shipping firm for its surplus cash.

Citing the example of VSNL, where a special dividend was announced just before privatisation, Shourie said: "In the case of SCI, whether to pay extra-ordinary dividend or not will depend (on various factors) so that people don't eye an

organisation just for its cash."

Shourie's comments come amid reports the that the government might withdraw Rs 200 crore (Rs 2 billion) as interim dividend from SCI before the financial bids are invited.

In the case of VSNL, he said: "It had reserves of over Rs 3,000 crore (Rs 30 billion) at the time of divestment. So, we asked them to assess how much do you really need for business plan that they had in mind and what was the need for (clearing) dues. The rest was then taken out as extra-ordinary dividend."

Official sources said the inter-ministerial group on divestment of SCI was likely to meet on April 29 to finalise the selloff details.

The IMG meeting, held in backdrop of Cabinet Committee on Divestment deciding to call for fresh bids to enable foreign companies to participate, is likely to finalise the expression of interest for selling the government's 51 per cent stake in SCI.

Though there were two bidders, Essar Shipping and Sterlite, still in the race for acquiring SCI, the CCD on April 15 decided to seek fresh bids for 51 per cent stake in the company for which any foreign company could participate in line with 100 per FDI allowed in the shipping sector.