BW LPG India Pvt Ltd has purchased four Very Large Gas Carriers (VLGCs) from parent BW LPG Ltd, expanding its fleet to eight such ships, all registered under the Indian flag, a top company official said.
BW LPG India did not disclose how much it spent on the four VLGC’s.
BW LPG Ltd, the world’s top owner and operator of very large gas carriers, is looking to tap the huge demand for shipping LPG into India, backed by government subsidy support for transporting LPG cargo on Indian flagged ships.
Three of the four VLGC’s have been registered under the Indian flag, while the fourth vessel is expected to be delivered in Q2 2022.
Chennai-based BW LPG India is the largest owner and operator of India-flagged VLGCs.
Minority stake acquisition
BW LPG Ltd also said it is in advanced discussions with an investor to acquire a minority stake in BW LPG India for a cash consideration of approximately $50 million based on second-hand broker valuations of the fleet, Elaine Ong, Chief Financial Officer, BW LPG, said.
Following this transaction, BW LPG Ltd will continue to be the majority shareholder of BW LPG India.
In August, BW LPG Ltd said it had increased its stake in the three-year-old Indian joint venture with Global United Shipping India Pvt Ltd to 88 per cent from the previous 50 per cent. All the seven VLGC’s owned by BW LPG India are technically managed by Singapore-based Synergy Group.
BW LPG India is now a subsidiary of Oslo Stock Exchange-listed BW LPG.
State-run oil firms have hired some 23 LPG carriers for shipping LPG cargo into India, of which 15 are Indian flagged ships, with BW LPG India accounting for seven of them.
Besides, there are spot cargoes every month, said an official.
On July 14, the Union Cabinet approved a subsidy scheme for Indian fleet owners. Local ship owners will get a 10-15 per cent extra on charter rates, depending on age slabs, on ships registered in India after February 1 this year.
For ships registered prior to February 1, the subsidy quantum ranges from 5-10 per cent, depending on the ship’s age. The subsidy quantum will be reduced by 1 per cent every year during the five-year tenure of the scheme.
Along with the so-called right of first refusal (RoFR) available to local fleet owners in global tenders issued by state-run firms, foreign ship owners will have to form companies and register their ships in India (100 per cent FDI is allowed in shipping since 1997) if they are keen on securing PSU cargo contracts. The government has budgeted a corpus of ?1,624 crore to be disbursed as subsidy over five years.
Source: The Hindu Business line