The Hindu Business Line : Shipping Corpn looking at PSU alliance for dredging

Mumbai June 9 The Shipping Corporation of India (SCI) is on the look out for an international consultant capable of charting out a roadmap for formation of PSU joint venture to enter the dredging market.

The Government is keen to promote a dredging company with the participation of PSUs to counter the growing influence of well-heeled global companies in the domestic dredging market by taking up commercial dredging activities and building up capabilities in design and construction of dredgers.

The SCI is slated to float a global tender next week, inviting bids from reputed international consultants with expertise in dredging and port sectors. SCI may fix July 13, as the last day for submission of the bids, sources said.

The corporation with Cochin Shipyard and major ports such as Mumbai Port, JNPT and Kolkata Port, are in the process of forming an alliance, which will eventually transform itself into a company to get into dredging activities. The alliance is currently operating as a nodal agency from the Mumbai headquarters of SCI.

The sources said the joint venture would have SCI, which is sitting on a cash reserve of over Rs 2,500 crore, as the lead partner. During the course of the formation of the company, the PSUs joint venture may also rope in the PSU oil companies as equity partners, especially as the oil firms are major users of Indian ports.

The ports have to regular undertake dredging activities to maintain and deepen their respective drafts to accommodate bigger ships and oil tankers.

The joint venture will also have shipyards as partners as it eventually plans to get into dredger design and construction, which will make India one of the few countries having this capability.

Equity participation

The equity participation by the member PSUs in the joint venture is yet to be finalised, the sources said.

What actually sparked off this move was the manner in which foreign dredging houses steadily consolidated their presence in the domestic dredging market, which was dominated by the State-owned Dredging Corporation of India till the sector was thrown open to private participation.

Industry sources said with the marginalisation of DCI, foreign dredging houses began to gain a tighter hold on the domestic dredging prices. The increase in dredger hire rates was reflected in the bids received for the Rs 2,500-crore Sethusamudram sea canal project, which involves a total dredging of 82.5 million cub metres for the setting up of a 167-km long sea route.

More recently, JNPT's tenders for the Rs 800-crore dredging of its harbour entrance channel received bids from the foreign companies that overshot the port's estimates.

As per the Government's 10th Year Plan, the various port expansion programmes alone would require a total capital dredging of about 144 million cubic metres.

The Netherlands and Belgium-based companies such as Van Oord BV, Boscalis, Jan de Nul and Dredging International have already cornered a significant share of India's dredging market. Other foreign companies such as Penta-Ocean of Japan, Great Lakes Dredge & Dock Co of US and Hyundai Engineering of Korea are monitoring opportunities in the Indian dredging sector.

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