Kandla and Paradip ports are in talks with two State-owned listed entities — Shipping Corporation of India (SCI) and Dredging Corporation of India (DCI) — to form joint ventures and operate in the dredging space.
“Such a strategy could be a win-win for all parties involved and our country as a whole, as the dredging capacity of Indian firms will go up,” Shipping Secretary P. K. Sinha told Business Line .
Both Paradip and Kandla ports have surplus funds and plan to dredge their ports to maintain deep channels. DCI is looking at various fund raising options to buy dredgers, while for SCI this could be a diversification to protect itself from shipping cycles.
Strategic view
Moreover, there is need to increase dredging capacity of Indian firms; many countries take a strategic view on dredging and do not permit international tenders in the space.
From the total dredging market worldwide, 43 per cent is not open for international tenders, according to the International Association of Dredging Companies. China and the US, the top two dredging markets valued at about €4 billion, are not open to international tenders, it says.
Dredging capacity provided by Indian firms is less than the dredging demand. So, in India, firms undertaking dredging require a security clearance.
“We have asked SCI to consider diversification into dredging space so that it can be protected from the cyclical nature of the shipping market. To tide over the fund crunch that SCI is facing now, a tie-up between SCI and a port such as Kandla that has regular demand for dredging is being looked at,” said Sinha. In 2011-12, Kandla port, which had a surplus of Rs 229 crore, spent Rs 139 crore on dredging.
Paradip port, which had a Rs 333 crore surplus during 2011-12, spent Rs 30 crore on dredging. However, Paradip port’s expenditure on dredging is set rise sharply, as the port plans to deepen its channels to attract larger vessels and remain competitive compared to nearby ports such as Dhamra.
Referring to the tie-up with DCI, Sudhanshu Shekhar Mishra, Chairman, Paradip Port Trust, said, “Our dredging requirement is set to double next year. As a port, we would like to focus on core activity of attracting cargo and efficient functioning. Our Board members are enthusiastic about the proposal.”
In a related move, DCI recently issued a tax-free bond for Rs 500 crore to buy dredgers, but could not raise the entire amount.
As vessels get bigger, to reduce the unit cost of transportation, it becomes important for ports to have deep drafts to enable larger vessels to call on them. In fact, firms such as Adani port SEZ have invested significantly in dredging equipment to maintain the channel depth. Ports under the Central Government spent Rs 733 crore on dredging in 2011-12.
Companies in the dredging sector include Dredging Corporation of India (DCI), Van Oord, Mercator Lines, Jan De Nul, Royal Boskalis, and Jaisu Shipping.
Dredging is underwater excavation of various materials such as rocks, boulders and sand to create deeper waters so that large ships can navigate.
mamuni.das@thehindu.co.in