Logistics

Dredging a revenue channel

P Manoj | Updated on June 27, 2021

The scoop: New ports require deepening of channels, which accounts for 20-25 per cent of the total project cost   -  SINGARAVELOU T

With overseas foray and equity partnerships in new ports, Dredging Corporation looks for new sources of income

Dredging Corporation of India Ltd (DCI) has sought government approval to take over the management of India-funded Sittwe deepwater port in Myanmar as part of its plans to explore new revenue sources, a company official has said.

The Sittwe port management deal would be finalised through a bilateral arrangement between India and Myanmar. It will be the first overseas assignment of DCI — India’s biggest dredging contractor — in the ports sector, a business it has identified for expansion because of the synergy with its core dredging activity.

The firm also seeks to tap the expertise of its four shareholder state-run port trusts — Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust — while venturing into port management.

Further, DCI is eyeing equity in the new ports being developed in India. The Visakhapatnam-based company will not pick equity directly in the new ports.

“New ports will require capital dredging (deepening the channel), which accounts for 20-25 per cent of the total project cost. Instead of taking cash for capital dredging, we plan to take shares in the port,” the official said.

This will not only fetch dividend income but also help DCI get the annual maintenance dredging work as a shareholder of the port.

“Wherever dredging is a component, we are trying to capitalise on our strengths,” the official said, noting that DCI was in talks with multiple port promoters for potential equity partnerships.

“Entering the port management sector is also part of a plan to expand into other revenue generating avenues,” he added.

The Sittwe deepwater port is part of the $484-million Kaladan Multimodal Transport project constructed by India, which is ready for operations.

The project seeks to reduce the cost and time for transporting goods to landlocked Mizoram.

Goods will be transported from Kolkata port to Sittwe by sea, and onwards to Paletwa in Chin State via the Kaladan river, from where it will be moved by road to Mizoram.

New norms for contracts

DCI received a big boost recently with the ministry of ports, shipping and waterways approving new norms that allow the four shareholder ports controlling DCI to finalise their respective dredging contracts with the company on nomination basis (without a tender).

The ministry said it also reserves the right to assign to DCI, in public interest, any contract for dredging work in any major port on nomination basis.

Mumbai-listed DCI is also close to signing a contract with Cochin Shipyard Ltd to build two high-end and large-capacity dredgers for nearly ₹2,000 crore.

Cochin Shipyard will build the two trailing suction hopper dredgers (TSHDs), with a hopper capacity of 12,000 cubic metres each, through technology collaboration with IHC Holland BV, the world’s largest dredger builder. TSHDs are used to maintain the channels of ports.

DCI has 10 of these and they meet 70-75 per cent of the annual dredging needs of major Indian ports.

“To meet the increasing demand for dredgers across the country, DCI is planning to expand its fleet with the construction of the two high-capacity hopper dredgers,” the official said.

The dredger building contract with Cochin Shipyard will have an option for procuring a third dredger, based on the performance of the first two dredgers and the market demand.

Published on June 27, 2021

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