The board of trustees of Mumbai Port Trust on Friday (27 April) scrapped a three-year contract signed with the Dredging Corporation of India Ltd (DCI) last September for maintaining the port’s channel and adjacent areas.

The board of trustees also decided to debar DCI from participating in a fresh tender issued by the Mumbai Port Trust to hire a new dredging contractor to take up the balance work on maintaining the port’s channel till 2020, according to two persons briefed on the decision.

The new contract will be at the risk and cost of DCI, which implies that it has to bear/reimburse the difference in cost, if the lowest bid received by the Mumbai Port Trust is higher than the scrapped contract.

DCI won a three-year maintenance dredging contract at Mumbai Port Trust beginning September 2017 by quoting ₹83.99 crore (about ₹28 crore per year) against an estimate of ₹141 crore.

The action taken by one Central government-owned entity against another further muddies the water on the process initiated by the Union Government to privatise DCI, which has seen widespread protests by the company’s employees.

The termination of the contract and the consequent disqualification, though restricted to the new tender at the Mumbai Port Trust, is expected to hurt DCI’s brand name and its ability to take up new dredging contracts at other state-owned ports, affecting the firm’s valuation during privatisation and scare away potential suitors, say experts.

Various reasons

The Mumbai Port Trust decided to scrap the contract after DCI pulled out the dredgers – three trailing suction hopper dredgers or TSHDs and one grab dredger — from the project site without permission. This, according to the port trust, was a serious matter that could not be condoned.

“Ever since the Centre al Government started the privatisation process, the mentality of DCI employees has turned negative. The company’s internal project management has become weak wherever it is taking up works,” said a Port Trust official.

Some others do not concur with this version.

“To suggest that DCI staff are demoralised and they have done a bad job at Mumbai Port is completely wrong. Don’t buy that argument, it will damage DCI,” said a dredging industry executive associated with the work.

“DCI has done a perfect job since taking up the contract. There has been no obstruction at Mumbai port, the traffic movement is normal. Actually, there is a rise in traffic which happens only when there is a clear path for vessels to come in and go,” this person said, asking not to be named.

“There is a bigger lobby at play here which wants the contract given to DCI terminated,” he stated.

“They are trying to sabotage the privatisation plan. The contract termination will affect the valuation of DCI. Mumbai has actually earned more revenue than last year because of the traffic movement. What is the problem that has been created in the port? Can the Port Trust specify that?,” he asked.

As against a requirement of one TSHD and one grab dredger stipulated in the contract, DCI deployed three TSHDs and one grab dredger.

The Mumbai contract also stipulates that DCI has to deploy dredgers for just 24 weeks in a year; they do not have to deploy them for all the 52-weeks to finish the contract.

This year, they have completed the work within 24 weeks. The first year’s contract is over, the Port Trust has given them port clearance to take away the dredgers, he said.

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