The Hindu Business Line : Govt revises dredging policy — Works to be awarded only through bidding

THE going may get tough for the public sector Dredging Corporation of India (DCI) in the wake of a significant change announced by the Shipping Ministry on Monday in the national dredging policy.

The new guidelines on awarding dredging contracts stipulate that all the 13 Government-owned major ports except for Kolkata will award dredging works only through a competitive bidding process.

DCI, being a PSU, has received great patronage so far from the Government.

It will now be allowed to exercise the right of first refusal and match the lowest bidder (either foreign or an Indian private dredging firm) only if its price bid comes within 10 per cent of the lowest bid price in line with the purchase price preference policy for PSUs.

This means that if the lowest bid is Rs 100, DCI will be granted the right of first refusal to match the lowest bid only if its price bid is Rs 110 or less.

Dredging work at Kolkata Port, which is funded directly by the Central Government, will continue to be with DCI till 2007, when the present contract expires.

The dredging works at the other major ports are financed by the port trusts from internal resources.

"The new dredging policy is expected to benefit the port trusts by infusing much-needed competition to the tendering process and will enable us to get competitive prices," said a port trust official.

Under the new policy, port trusts will no longer have the option to award their dredging works on nomination basis to DCI.

The existing policy had attracted the ire of foreign and domestic private dredgers.

Following representations from the private sector dredgers, the Shipping Ministry had convened a meeting of all stakeholders in November last to finalise fresh guidelines for dredging contracts when the current policy lapses on March 31, 2004.

The existing policy allows port trusts to finalise their dredging contracts either through open tendering process or award the work to DCI on nomination basis, under which both the port trust concerned and DCI arrive at a mutually acceptable rate.

"DCI was taking undue advantage of the existing dredging policy," the port trust official said.

When a tendering system is followed, everybody should be given equal opportunities and treated on the same platform, he added.