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Why should owners not be transporters?

IS THERE anything wrong in the public sector Indian Oil Corporation joining hands with the private sector Great Eastern Shipping Company (Gesco) to enter LNG shipping? Mr. Rajnath Singh, Union Minister for Surface Transport, thinks it defi es logic. He has reportedly complained to the Minister for Petroleum and Natural Gas, Mr. Ram Naik, against IOC's move. His objection is chiefly on the ground that since there is already a public sector undertaking in shipping, why should anoth er PSU enter the same business. The issue assumes significance as India proposes to import a large volume of LNG, and several shipping lines are trying to get a share of this high-freight cargo.

There is nothing wrong in two PSUs doing the same business. There are several competing public sector banks. There is also nothing illogical about a public sector company forging an alliance with a private corporate. There are global oil majors with a st rong presence in shipping. So, on the face of it, Mr. Rajnath Singh's objection seems baseless.

IOC and Gesco, along with a foreign partner, propose to acquire an LNG carrier. The combine is bidding for the tender for LNG ships floated by Petronet, a PSU-promoted consortium for import of LNG.

The public sector Shipping Corporation of India, along with Mitsui-Osk, is also one of the contenders for the Petronet contract. Apparently, SCI will have to compete with the IOC-Gesco combine for the Petronet tender. According to IOC officials, they had first approached SCI for a partnership, but were turned away. Then, they went to Gesco which gave them a red-carpet welcome. For Gesco, LNG is high on its agenda and IOC, with enough cash in its kitty, is an ideal partner.

Mr. Rajnath Singh has another grouse. At one time, the Surface Transport Ministry had suggested that IOC and other oil PSUs pick up a stake in SCI, which has been making the shipping arrangement for import of crude for them, for several years. SCI too wa s keen to have some of its major customers as its partners. However, oil PSUs, including IOC, did not see any advantage in putting their money in the non-core shipping business. The same IOC is now tying up with a private sector shipping company to compe te with SCI for LNG trade. This is something that a Minister responsible for SCI's growth and development cannot appreciate.

But the Government itself is looking for a strategic partner for SCI. The Disinvestment Commission had recommended that the Government sell up to 74 per cent of SCI's equity. The Ministry is understood to be preparing a note for the Cabinet on SCI's priv atisation. So, SCI may also soon become a private company. Besides, SCI has already tied-up with the multinational Enron, by picking up 20 per cent equity in its LNG carrier, being built for bringing LNG to its power plant at Dabhol in Maharashtra.

So, it is not the IOC alone that has tied with a private company for the LNG business. SCI has done it before; and it was the first one to do so, that too, by agreeing to a minority stake. IOC-Gesco venture is like any other joint venture. But the differ ence is in its approach. IOC is an equity holder in Petronet and is privy to its tender details. It is the owner himself bidding for his own contract.

If these developments on the LNG front have hurt national interest, the Government alone is to be blamed. It has been working on a national LNG transportation policy for over a year now. The Government should have come out with its policy before the Petr onet floated its tender.