The EU transport council has unanimously agreed on the commission's proposal to speed up the phasing out of single-hull tankers, including an immediate ban on vessels aged more than 23 years and built before 1982. The EU has put end-June 2003 as the deadline for ban.

Says Shipping Corporation of India (SCI) director S S Renganaker: "This will ultimately force us to totally restructure the position of out fleet. Addition of new tonnage and phasing out old vessels cannot be ruled out."

Indian National Shipowners' Association officials say the International Maritime Organisation has already taken up the issue. "They have already asked the EU to review their proposal with some relaxation."

According to industry sources over the last three years the share of double-hull tonnage in the world fleet has gone up 30-50 per cent with another 60 million tonnes of double-hull capacity in shipyard order books. In fact the European tanker industry, which to a large extent had already anticipated the application of the existing phase-out rules, is presently undergoing the largest modernisation programme.

The Indian shipping lines, especially SCI, have not geared up to face the new legislation and will face a tough time in competing with other global players. This is happening at a time when the government is in the process of divesting the controlling stake in SCI. So, it is feared, the proposed move by the EU will affect the valuation. Also, many foreign investors are reluctant to take exposure in the company.

Nearly 30-per cent SCI's fleet consists of single-hull ships. The company has a paid-up capital of Rs 282.3 crore and a net worth of Rs 2,134.39 crore. In the year ending March 2001, SCI reported a turnover of Rs 2,905.3 crore with a profit of Rs 242.56 crore.

Currently, three domestic players — Essar Shipping, Videocon International and Sterlite Industries — are in the race for grabbing the 51-per cent government holding in SCI. Sources say some of these players have entered into a strategic alliance to form special purpose vehicles with leading foreign shipping companies to participate in the bidding.