Ports may get up to 50 per cent of their capital dredging costs as grant from the Centre, according to a Shipping Ministry proposal.
This is important because ports require deeper draft to attract larger vessels, and dredging is capital-intensive.
Dredging is underwater excavation of various materials such as rocks, boulders and sand to create deeper waters so that large ships can navigate.
Capital dredging is undertaken to create depth and maintenance dredging is done to maintain certain level of depth.
Also, at present, there are no standard norms for budgetary support for dredging to ports. As a result, some ports get budgetary support, while some fund dredging from their internal resources.
“We are considering a scheme to fund capital dredging expenses of ports by up to 50 per cent to increase the draft of ports to 14 metres in the first phase, and 17 metres in the second phase,” Shipping Secretary P.K Sinha, told Business Line . This is based on the recommendations of a committee, headed by Planning Commission Member, B.K. Chaturvedi.
“Now, ports get budgetary support for dredging on a case-by-case basis. The extent of budgetary support varies depending on the needs and financial position of the ports,” another Government official said.
So, the 50 per cent norm may also mean lower outgo for some ports.
Companies in the dredging sector include Dredging Corporation of India (DCI), Van Oord, Mercator Lines, Jan De Nul, Royal Boskalis, and Jaisu Shipping.
The exact contours of the proposal are yet to be finalised. Major ports, or ports under the Central Government, are expected to undertake an estimated 221 million cubic metres (mcm) of capital dredging and 418 mcm of maintenance dredging over the next five years.
Draft of major ports vary and can go as low as seven meters in older ports and 16 metres in newer ports.
Internationally, the top 20 ports maintained a draft of 14-16 metres in 2003.
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 upon them.
It is not yet clear if the funding will be available to State Government-owned ports as well. The Central Government owns 14 ports (termed as major ports), while non-major ports such as Mundra, Hazira and Dhamra are owned by the State Governments.