Shipping Corporation allowed to exit LNG venture

Wednesday, 22 January 2003, 08:00 Hrs
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NEW DELHI: The Indian cabinet Tuesday approved a proposal to allow the state-run Shipping Corporation of India (SCI) to dispose of its 20 percent stake in a liquefied natural gas (LNG) transportation joint venture.

Greenfield Holding Company Ltd. has been permitted to sell the stake to Japanese partner Mitsui OSK Lines (MOL).

MOL and the Oman government currently hold 40 percent stake each in the Cayman Islands-based Greenfield Holding. The company was formed for construction, operation and ownership of LNG tanker to be charted to the Dabhol Power Company (DPC) in Maharashtra for transportation of gas to its terminal.

With the Enron Corporation-promoted DPC's $2.9-billion and 2,184-MW power project in limbo following payment problems with one of the partners and sole off-taker Maharashtra State Electricity Board, the fate of the allied 5-million tonne LNG terminal project has been hanging in balance for over a year.

DPC has contracted to receive the LNG from Oman. The project was stalled when it neared 80 percent completion.

"With the project facing uncertainty with respect to long-term employment of the tanker, it is beneficial for SCI to sell its equity of 20 percent in the project to MOL at par value and exit from the project," the official spokesperson said at a media briefing.

SCI's stake has been valued at $11 million at par value, the spokesperson said.

In view of SCI's inability to maintain participation in the project, the two equity partners have made an offer to purchase its stake.

"MOL would also repay all the shareholder's loan made by SCI amounting to around $1.16 million together with accrued interest," the spokesperson added.

State-owned shipping major SCI is also on India's disinvestment list with the government keen on offloading 51 percent of its 80.12 percent stake.
Source: IANS
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