Logistics

‘Atmanirbhar’ scuppered in JNPT-DCI dredging deal

P Manoj Mumbai | Updated on September 18, 2020 Published on September 18, 2020

The terms of the dredging contract at JNPT does not deter DCI from sub-contracting the work to a foreign contractor or even using a foreign flag dredger for the contract   -  Bloomberg

Dredging Corporation of India Ltd (DCI) has outsourced a portion of the annual maintenance dredging work it secured from Jawaharlal Nehru Port Trust (JNPT) — one of its four shareholders — to a Dutch dredging contractor which in turn plans to deploy a foreign flag dredger to carry out the work.

The development exposes the gaps in the implementation of the ‘Atmanirbhar Bharat’ initiative as part of the Make in India policy in the maritime sector. The revised policy announced in June for public procurement makes it mandatory for state-run firms to issue local tenders and award contracts of less than ₹200 crore only to Indian flag ships owned by domestic firms.

DCI, which is owned by Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust, secured a three-year annual maintenance dredging contract from JNPT last year on nomination basis.

Subcontract

Like the first year of the contract, DCI has sub-contracted some 85 per cent of the work estimated at ₹189 crore this year to Van Oord India Pvt Ltd, the wholly-owned Indian unit of Dutch dredging giant Van Oord Dredging and Marine Contracting Co NV, for ₹71 crore, multiple sources said.

Van Oord will deploy two trailing suction hopper dredgers – the Netherlands-flagged ‘Rotterdam’ with a hopper capacity of 21,000 cubic metres and Indian flagged ‘Volvox Asia’ having a hopper capacity of 10,000 cubic metres.

To be sure, the terms of the dredging contract at JNPT does not deter DCI from sub-contracting the work to a foreign contractor or even using a foreign flag dredger for the contract.

“Even then, a dredging contract involving a state-run port trust and a state-run dredging contractor cannot be at variance with the government policy on Atmanirbhar Bharat,” a government official briefed on the plan said.

While DCI’s lack of capacity for undertaking capital dredging is known in the dredging industry, the JNPT contract shows that the Vizag-based company is facing capacity constraints in undertaking maintenance dredging also.

DCI has also been accused of securing contracts on nomination basis from state-run major port trusts, some of whom are its shareholders, and then outsourcing it at lower value, thereby making “extra money” out of it.

In the first year of the JNPT dredging contract, DCI outsourced a large portion of the 165 crore work agreed with the port trust to a private dredging contractor for a much lesser value, making more than ₹30 crore of “extra money” in the process from the deal.

Lesson learnt

Wiser from the experience of spending more than the market rates for annual dredging, JNPT decided not to pay the full ₹189 crore estimated by DCI for this year’s work. Instead, JNPT said it will only pay DCI the amount it finalises with the sub-contractor plus a 10 per cent extra.

As a result, DCI will receive ₹78 crore (71 crore finalised with Van Oord plus a 10 per cent extra) for the outsourced portion of the work and about ₹22 crore for the balance 15 per cent work undertaken by itself, from JNPT.

JNPT declined to comment while DCI could not be reached for comment.

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Published on September 18, 2020
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