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A memorandum of understanding (MoU) signed between Dredging Corporation of India (DCI) and National Highways Authority of India (NHAI) for supply of sand removed during dredging at a South East Asian country for use in Indian highway construction work is expected to boost the valuation of the state-owned firm put up for privatisation.
Officials briefed on the plan said the arrangement will give employment to two cutter suction dredgers (CSDs) of DCI for an initial period of three years.
Besides, DCI will facilitate working of the business intermediaries in the arrangement which, in turn, will help the company earn some commission or facilitation fee. “It’s business in hand. DCI will get employment for two cutter suction dredgers for three years. To that extend, it will be a boost,” said a government official.
DCI is currently executing dredging contracts worth ₹2,000 crore spread over the next five years. Apart from DCI and NHAI, the arrangement will also include Dharti Dredging and Infrastructure Ltd and a Dubai-based outfit.
DCI will undertake dredging at locations in the South East Asian country, potentially Malaysia, mainly for the purpose of mining sand which belongs to one of the business intermediaries. These business intermediaries will ship and store sand at various ports in India and market it.
NHAI will facilitate the process by displaying the availability of sand at various stockyards at the ports.
The two cutter suction dredgers of DCI are expected to sail to Malaysia in April/May to start dredging work after completing the contract at Paradip Port Trust. DCI, meanwhile, suffered a setback when an arbitration tribunal last week ordered the Visakhapatnam-based firm to pay compensation to Mercator Ltd for abruptly terminating the contract on three dredgers it had hired from Mercator to work on the now stalled Sethusamudram Ship Canal Project.
To recover payment
Separately, DCI is seeking to recover ₹426.41 crore from Sethusamudram Corporation Ltd for work done on the project but a Shipping Ministry-appointed panel had recommended payment of ₹308.97 crore to DCI.
Sethusamudram Corporation Ltd is a special purpose company formed by state-run firms such as Dredging Corporation, Shipping Corporation of India, Visakhapatnam Port Trust, Chennai Port Trust, Paradip Port Trust, VO Chidambaranar Port Trust and Kamarajar Port Ltd to raise funds and implement the project.
Sethusamudram project
The Sethusamudram Ship Canal project seeks to create a shorter shipping route between the east and west coasts of the country but has been halted since July 2009 after the last dredger (specialised ships used to deepen the channel of ports and harbours) digging the new channel was pulled out of service on July 27, 2009 when a four-year contract between DCI and Sethusamudram Corporation ended.
Billed as India's Suez Canal, the ₹2,427.40-crore Sethusamudram Ship Canal Project is expected to reduce ship journeys between India's western and eastern coasts by as much as 30 hours or up to 424 nautical miles by creating a channel between the Indian mainland and Sri Lanka.
The project involved boring a new shipping lane connecting the Gulf of Mannar and Bay of Bengal through Palk Straits and Palk Bay.
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