Home » Financial support for dredging is necessary to reduce port charges

Financial support for dredging is necessary to reduce port charges

Financial support for dredging is necessary to reduce port charges

A change in the Dredging Policy is on the anvil, and Union Minister of Shipping GK Vasan describes to Shashidhar Nanjundaiah what it envisage and what is in store for the private sector.

What are the provisions in the current dredging policy for private participation? Is there a bidding process?
As per the dredging policy in force, all Indian dredging companies owning Indian flag dredgers including DCI shall have the right of first refusal. Thus the preferential clause as of now is applicable to all Indian players and not just for DCI. There is no preferential clause for DCI in the existing Dredging Policy.

Ports need to develop the capacity to receive bigger ships, for which capital dredging to achieve the desired level of draft and maintenance dredging to retain that level, have to be undertaken. One of the hindrances for increasing the navigability of Indian channels is the lack of sufficient dredging capacity in India and dearth of funds with the ports as dredging, both capital and maintenance, particularly where there is perennial need for dredging, is highly capital intensive. In most maritime nations, dredging in the channels, both capital as well as maintenance is taken up with budgetary support from either the national government or local governments.

Further, to meet the increased dredging requirement, there is need to increase the dredging capacity to this extent and Indian players should do this on their own or through strategic alliances.

A new dredging policy, being drafted, would contain basically the following elements:

i. The Policy would aim at seeing that ports are able to maintain navigable channels throughout the year through environmentally acceptable dredging at best competitive costs to the ports.
ii. The Policy would encourage Indian players, both DCI and private parties, to develop a dredging fleet and command expertise that is comparable to the best in the world.
iii. In order to reduce the cost of dredging, all ports—major or minor and even the ports coming under PPP model—would go for competitive bidding.
iv. The right of first refusal to the Indian flag bearers would be continued.

All major ports (except Kolkata Port for the present) are going for open competitive bidding as per the Dredging Policy presently in vogue.

Are there any plans to build a dredger building yard in India?
Ministry of Shipping recently announced the Maritime Agenda 2010-20, wherein it considered the introduction of a new Ship Building Subsidy scheme etc. Dredger is a highly mechanised and complicated piece of equipment requiring the highest degree of technical expertise and know-how. Currently, most of the dredgers used by DCI and other players are imported from outside. Even those dredgers which have been built in India have been mostly in collaboration with foreign parties. With the ever-growing requirement of deepening the channels throughout the ports and the consequent requirement of dredging both capital and maintenance, it is considered that having a dredger building yard within the country with state-of-the-art facilities is necessary. To this end, the government would support those coming forward for the purpose.

As the number of ports burgeon, what opportunities do you see for domestic dredging spares industries?
The dredgers work along or near the coast and as such are more susceptible to wear and tear as compared to merchant ships. As such the requirement for spares for dredgers is more. With the growing requirement of dredgers, there will be increased requirement for the dredger spare parts for their maintenance and repairs. There is a huge opportunity for the spare part manufacturers and suppliers to cater to the increased requirements.

How has increasing private sector participation in port development influenced or impacted dredging activity? Does the emergence of private ports indicate new rules of the game?

Participation of the private sector in port development has increased due to the tremendous growth in dredging demand both in capital and maintenance dredging activities. However, there are no specific rules as of now for private ports to meet the dredging demands. The private ports are at liberty to choose the parties for dredging. However, it is required to have a foolproof mechanism to see that these ports follow environmentally acceptable disposal practices.

Financial support for dredging is necessary for reducing port charges. The channels leading to the major ports, if declared as National or State Channels, and if each port is asked to remit certain amounts to the concerned government in proportion of the quantum of traffic handled by each port, the revenues earned so forth would meet the finances for dredging.

Do ports find it an effective strategy to outsource dredging?
Dredging is a highly specialized job and requires huge capital investment and highly skilled manpower. Some major ports have limited capacity of dredging equipment of their own that are inadequate to meet the entire requirement. However, dredging is a highly specialised activity and the ports do not have the necessary expertise in the field to undertake the dredging on their own. Therefore the same has to be outsourced either to DCI or to other players. Till a decade ago DCI enjoyed the monopoly and has been doing a commendable job contributing to the maintenance of navigable channels. Recently the dredging sector has been opened up to private players and has become very competitive. Consequently some private players have also joined the forum. DCI has been competing with the private players and has been successful in getting bids in many cases.

Is the contracting system with DCI adequate?
DCI is the premier dredging company in India under the Government of India and has been incorporated mainly to cater to the maintenance and capital dredging requirements of major ports, the Navy and other maritime establishments. Being the premier dredging company, DCI has contributed towards the quality of work and the customers of DCI are satisfied with the performance of the company.

The contracting system is regulated as per the ports' requirements in particular and it takes care of the interest of ports.

The “river-sea” and coastal shipping hasn't really taken off despite a specific legislation in 2008, why? Can an emphasis on dredging be an impetus?
The River-Sea Vessel Notification was initially issued in 2008 for river-sea vessels of Type III and Type IV. The notification was subsequently revised to include two more types of river-sea vessels, Type I and Type II, and a consolidated River-Sea Vessel Notification for Type I to IV was issued in the year 2010 covering all four types as envisaged originally.

As on date, 24 vessels have been certified under River-Sea Vessel Notification and six more vessels are under various stages of construction. In so far as dredgers are concerned, they can also be certified under this notification provided they do not operate beyond the territorial waters of India. Hence an emphasis on dredging in the Indian coast can certainly boost the coastal shipping in India.

The Ministry is considering the draft Coastal Shipping policy and it is expected to be finalised soon.

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