The Hindu Business Line : Contracts to foreign majors — Indian dredgers stress need for proper pricing mechanism

INDIAN Dredger Owners Association (IDOA), a newly-constituted body of eight Indian dredging firms, mostly small, has urged the Director-General of Shipping "to do everything within its powers" to prevent virtual marginalisation of Indian dredging firms in the hands of much stronger foreign dredging majors.

In a communication to the DG Shipping, IDOA has made three suggestions. First, in any contract on dredging on the country's coast, the Indian dredging firms be given first right of refusal irrespective of the difference between the lowest rates quoted by the Indian firm and a foreign firm. Under the present guideline, the difference in the lowest quoted bid price between the technically qualified Indian flag dredger exercising the right of refusal and the lowest quoted by the foreign flag dredger should not exceed 10 per cent. In case the difference is more than 10 per cent, the right of refusal shall cease to exist.

This means, as IDOA points out, a foreign flag dredging company quoting more than 10 per cent lower rate will be awarded the contract without any right of refusal by the Indian firm. This will mean that the Indian flag dredger will idle while a foreign flag dredger will work in Indian waters.

IDOA has also emphasised the need for a proper pricing mechanism based on competitive market rate. Instances are in record to prove that the dredging contract in one of the east coast ports was awarded to a foreign contractor at a rate much higher than the rates quoted by Indian firms.

Finally, IDOA wants that the government guidelines should be applicable to all ports, major and minor and government owned and privately owned.

The determination of technical specifications in respect of any job in coastal waters, namely identification of dredgers, their capacity and other equipment, merit serious consideration of the government, feels IDOA. This is important because sometime technical specifications are manipulated to suit the purpose of given dredging companies.

In the process some of the Indian firm are often debarred even from bidding. What therefore needed is that the ports should only furnish their requirements, with the stipulation that those requirements must be fulfilled within a given timeframe and cost and any lapse will attract penalty. The bidding dredging company must be left to decide which dredger or technology would it use to meet the prescribed requirement of the client.