The Hindu Business Line : Domestic dredging cos get policy support

Moving the goalposts
Policy applies to maintenance and capital dredging works
Major ports should not be stringent in restricting Indian bidders
Foreign cos steadily gaining ground in domestic dredging market

Chennai March 18 Indian dredging companies will enjoy first right of refusal if their rates are within 10 per cent of the lowest valid offers in bids for major port contracts.

The Shipping Ministry's new dredging policy, which is designed to give Indian companies owning Indian flag dredgers an edge while bidding for contracts, states that all 13 major ports "shall invite open competitive bids for dredging works, and Indian companies owning Indian flag dredgers shall have the right of first refusal if the rate is within 10 per cent of the lowest valid offers."

The policy will take effect on April 1 and remain valid for three years. It will apply to both maintenance and capital dredging works, with the exception of maintenance dredging requirements of the Kolkata port, for which separate instructions will apply.

The move comes on the heels of total exemption from import duty for dredgers in Budget 2007-08.

Rights reserved

Besides, the Government also reserves the right to assign, in public interest, any contract for dredging work in any of the major ports to Dredging Corporation of India (DCI) on nomination, according to the policy.

Further, the policy says that major ports should also ensure that a pre-qualification criterion is fixed in advance and that they should not be stringent in restricting entry of certain potential Indian bidders. The pre-qualification conditions should be exhaustive, it adds.

Port Requirements

According to Mr N.K. Raghupathy, Chairman of Tuticorin Port Trust, the total dredging requirement in the country's 13 ports during the 11th Five-Year Plan (2007-2012) is an estimated 812.55 million cubic metres.

Minor ports also have plans to dredge a total of 391.07 million cubic metres.

Global players

Foreign companies have been steadily gaining ground in the domestic dredging market. The Government allowed international companies to enter the maintenance dredging business in 1993.

Majors such as Royal Boskalis Westminster, Dredging International, Jan de Nul Group, Van Oord ACZ and Ballast Ham Dredging have won large capital dredging projects through the competitive bidding process and are now regular participants in the maintenance dredging market.

Dredging projects worth over Rs 2,000 crore are planned in the next couple of years at various ports.

Till a few years ago DCI virtually had a total monopoly over the dredging market. Last year L&T entered the business by acquiring majority stake in International Seaport Dredging Pvt Ltd.

Some of the dredging projects are at Jawaharlal Nehru Port (Rs 800 crore), Paradip (Rs 250 crore) and Ennore (Rs 143 crore).

On Friday on the BSE, the DCI scrip closed at Rs 487, down 1.3 per cent from the previous close of Rs 492.85.