In International Shipping News 28/04/2015
Even as a breakthrough on lifting of western sanctions on Iran looks possible, India’s shipping ministry has circulated a draft cabinet note proposing to walk out of a 40-year-old joint venture shipping line Irano-Hind Shipping Company in the face of accumulating losses.
The note has sought the views of key ministries on the transfer of shares of state-run Shipping Corporation of India (SCI) in the JV to Islamic Republic of Iran Shipping Lines.
Once approved, the move will allow SCI to disengage from the venture, leaving the state-run Iranian shipping company alone to source business from India.
The separation would come at a time when several countries are keenly awaiting resumption of trade with Iran to push their own businesses.
The Indo-Iranian joint venture was formed in 1975 by Iran’s former ruler Shah Reza Pahlavi and the then Indian prime minister Indira Gandhi as a bond of friendship. While SCI owns 49 per cent in the JV, the Iranian partner owns a majority 51 per cent.
In April 2013, the cabinet committee of economic affairs (CCEA) of the previous UPA-II government had decided to dissolve the company in the face of sanctions imposed on Iran by the western powers, severely impacting thejoint venture’s viability.
The sanctions caused payment-related problems forcing India to slash import of Iranian crude oil.
As dissolving the company is a long-drawn process involving Iranian and international laws, the shipping ministry has now reconsidered its earlier decision and decided to instead transfer SCI’s shares to the Iranian partner.
The two key arms of the new government — the ministry of external affairs (MEA) and the ministry of home affairs (MHA) — apparently seem to be in a wait-and-watch mode, reserving their comments on the issue.
“We had circulated the note for inter-ministerial consultation some time ago. The law ministry has given its go-ahead for transfer of shares. The ministry of external affairs and the ministry of home affairs are yet to send their comments. We will go to the cabinet for approval, only after all the ministries provide their inputs,” a shipping ministry official told Financial Chronicle.
Asked if the ministry would review its decision (on transfer of shares) and prefer continuing the JV, the official said, “The JV was a profitable venture. It started making losses only after economic sanctions. We would have definitely preferred to continue the JV only if it made profits. But the fact is that sanctions are there and the company is in loss.”
Irano Hind Shipping Company owns a fleet of crude oil tankers and dry-bulk carriers.
“It would take years to wind up the company and allocate the assets and liabilities as per the shareholdings of the two partners. It is a complex procedure,” the official quoted above said.
