Government weighs $2 billion package for ship acquisitions

The centre is considering a Rs10,000 crore ($2 billion) financial package to help domestic shipping firms finance acquisition of new vessels amidst the global credit squeeze, APVN Sarma, secretary, ministry of shipping, said.

''We have requested the finance ministry to consider a Rs10,000 crore package," Sarma said on the sidelines of a maritime conference.

''Foreign banks are not lending now. Traditionally they've been the lenders for shipping acquisitions. This is some sort of financing for acquisition of new ships by Shipping Corp of India and also by other Indian private shipping companies," he added.

State-run Shipping Corp has planned capital expenditure to the tune of Rs15,000 crore in the eleventh five-year plan period and currently has an order pipeline for 29 new ships.

The government will disburse loans of up to Rs10,000 crore to shipping firms, Sarma said, but did not give other details.

Fund crunch has forced SCI to postpone the purchase of eight new vessels to the next financial year.
 
''We had plans to order four very large crude carriers and four capesize vessels at a total cost of $1 billion," SCI chairman and managing director S C Hajara told reporters on the sidelines of a shipping summit.

"Now, we would order them in the next year," he said.

Indian shipping firms need $20 billion (Rs100,000 crore) to upgrade and modernise their vessels.

But the global credit market crisis has forced them to postpone or defer their fleet expansion plans.