The Hindu Business Line : SCI, other PSUs plan jt venture for dredging

Led by Shipping Corporation of India (SCI), cash-rich PSUs from the shipping, port, shipbuilding and petroleum sectors have initiated a move to float a mega joint venture company to enter the domestic dredging market.

The venture will not only take up dredging operations at ports, but will later get into building of dredgers, which will steer India to join a select club of countries having this capability.

Sources said the initiative, which was proposed by the Government, is mainly intended to counter the growing influence of financially-muscled foreign companies in India, after the dredging sector was thrown open for foreign participation.

SCI likely to be lead partner

The sources said the company is expected to have SCI, which is sitting on a cash reserve of over Rs 2,500 crore, as the lead partner. Apart from major ports, which require regular dredging to maintain the desired drafts, the company is likely to rope in PSU oil companies as equity partners, especially as the oil firms are major users of Indian ports. It will also have Government-owned shipyards such as Mazagon Dock, in tune with its plans to get into construction of dredgers.

A first step was taken in this direction when the board of Mumbai port, which met on Wednesday, approved the port's plan to team up with SCI and JN port to float a joint venture company, which will also be roping in Mazagon Dock. "Initially, the plan is to take up dredging operations by getting dredgers on charter. In the longer term, we will seriously think of getting into building of dredgers," Mr A.K. Bal, Deputy Chairman of the port, told Business Line.

Expansion in phases

The company would be expanded, in phases, by taking on board new equity partners from the port and petroleum sectors. After it starts construction of dredgers, the company could take up overseas orders, especially from the neighbouring countries, said an official associated with the initiative.

What actually triggered off this move was the manner in which foreign dredging houses steadily consolidated their presence in the Indian dredging market. As a fall-out of this, dredger hire rates shot up, as was seen in the case of the bids received for the Rs 2,500 crore Sethusamudram sea channel project. The construction of the project, which envisages a total dredging of 82.5 million cub mts for dredging of the 167-km sea channel, now significantly hinges on the foreign companies.

Attracting intl players

The growth in demand for dredging in India has been attracting international dredging majors from Belgium, Netherlands, Japan, Korea and the US in recent times.

These companies see significant opportunities in the domestic dredging sector, especially with India lining up major port expansion projects.

As per the Government's Tenth Year Plan, the various port expansion programmes would require a total capital dredging of about 144 million cub mts.

Apart from the Netherlands and Belgium-based companies that have already set up shop in India, other companies, such as Penta-Ocean of Japan, Great Lakes Dredge & Dock co of US and Hyundai Engineering of Korea are looking at India as a major growth opportunity in the dredging sector. In fact, these international players command a major share in the global dredging market. The major overseas players in this sector are Van Oord BV and Boscalis of Netherlands and Jan de Nul of Belgium.

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