Financial Daily from THE HINDU group of publications
Monday, Nov 29, 2004
Financial Daily from THE HINDU group of publications Monday, Nov 29, 2004 |
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Logistics
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Shipping Columns - On the move Dredging can bring up big business for Indian flags Santanu Sanyal
A dredger at work on the Hooghly river... The national dredging sector feels that the Government should reserve the sector for the national flag and the Indian companies must have at least 76 per cent equity stake in any dredging venture.
For example, in past few years, capital dredging projects worth about Rs 2,000 crore were executed by foreign dredging firms and these included, among others, the Indian Navy's Sea Bird project at Karwar (Rs 700 crore), Indian Oil Corporation's refinery project at Paradip (Rs 450 crore), dredging at Dahej for Petronet LNG Ltd's LNG terminal (Rs 450 crore) and at Hazira for Bharat Shell's LNG terminal (Rs 300 crore). Several massive capital dredging projects are in the pipeline. These include, among others, the Sethusamudram project (Rs 2,500 crore), Dhamra port project (Rs 1,000 crore), Mandva project in Maharashtra (Rs 1,000 crore), JNPT (Rs 800 crore), recessionary dredging in the Hooghly river (Rs 400 crore) and a huge land reclamation work, estimated to cost several hundred crores of rupees, for a major housing project near Kolkata. Several ports are in the midst of taking up channel deepening work, which will be, by and large, capital dredging in nature, to conform to the Centre's plan to ensure at least 14m draft in almost all sea ports to enable the port authorities concerned to handle large vessels with large average parcel loads. These include Paradip (Rs 130 crore), Mumbai and New Mangalore ports (Rs 250 crore each), Kandla (Rs 100 crore), Kochi (Rs 450 crore) and Mormagao (Rs 100 crore). A look at maintenance dredging. By far the country's biggest maintenance dredging is undertaken in the Hooghly river (Rs 350 crore annually) for Kolkata port (including Haldia). The maintenance dredging work in other major ports is, of course, of much smaller magnitude. These include Paradip (Rs 70 crore), New Mangalore and Kandla (Rs 50 crore each), Kochi (Rs 40 crore), JNPT and Mumbai (Rs 30 crore each), Mormagao, Visakhapatnam and Indian Navy (Rs 20 crores each) and Chennai, Ennore and Kakinada (Rs 10 crore each). The maintenance dredging requirement in private ports too, it is felt, will be substantial. The cost of maintenance dredging at Pipavav, Mundra and Sikka is estimated at Rs 20 crore each, at Hazira and Dahej Rs 60 crore each and at Gujarat Chemicals port, also at Dahej, Rs 20 crore. The Gujarat Maritime Board and the Maharashtra Maritime Board, each having under it a large number of minor ports in need of extensive dredging, too have before them proposals for dredging work worth several hundred crores of rupees. The value of the country's annual dredging requirement, covering both maintenance and capital dredging, it is estimated, will be a minimum of Rs 2,000 crore. Despite the huge potential, people in the dredging business regret, the dredging and its problems, particularly those facing the Indian firms, both in the public and private sectors, do not get the kind of attention and support they deserve. This is not true of other sectors. For example, LNG shipment. The imported LNG is currently handled only at one terminal of Petronet LNG Ltd at Dahej in Gujarat. The capacity of the terminal is five million tonnes. Two ships are now engaged in the transportation of the gas from Oman. The charter rate of the each ship is about $67,000 per day. There is an additional cost of about $30,000 per day. Together, the cost of transportation comes to about $100,000 per day or $36.5 million in a year per vessel. For two vessels, the total cost works out to about $73 million or around Rs 330 crore. This is insignificant compared to the dredging business? Yet, the Government is exploring various ways and means to protect the interest of national carriers in LNG shipment. But the issue of protecting interest of national flag in dredging has eluded the government's priority list. The Government is in favour of Indian lines acquiring at least 26 per cent equity stake in any venture engaged in transportation of LNG. However, there is no such proposal before the government in respect of dredging. The national dredging sector feels that the Government, considering the huge payout involved in dredging, should reserve the sector for the national flag and the Indian companies must have at least 76 per cent equity stake in any dredging venture. There is another point. India, a member of the Negotiating Group on Maritime Transport Service (NGMTS) under the WTO, is going to be a signatory to the proposed multilateral agreement. It is to be noted that WTO has left the coastal shipping of each member country "unbound". Which means the member countries are under no compulsion to declare and abide by the terms and conditions of the agreement in respect of coastal shipping. They will be free to pursue their own rules favouring national fleet in coastal shipping. Since dredging essentially concerns coastal waters, the Union Government, it is felt, should lay down rules favouring national flag in dredging. This is not a tall demand. This is exactly what almost all other maritime countries practice.
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