Dredging Corporation of India wins annual contracts from Cochin and Paradip port trusts

P Manoj MUMBAI | Updated on May 19, 2019 Published on May 19, 2019

A dredger of Dredging Corporation of India undertaking beach nourishment near Visakhapatnam   -  The Hindu

First annual maintenance dredging contracts since DCI was acquired by four major port trusts

Dredging Corporation of India Ltd (DCI) has won the annual maintenance dredging contracts from Paradip Port Trust and Cochin Port Trust recently .

These are the first contracts since the central public sector undertaking was acquired by a consortium of four major port trusts -Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust for Rs 1,049 crore in March.

DCI won the annual maintenance dredging contract at Cochin Port Trust for Rs 83.89 crore after emerging the lone bidder following two rounds of tender, a shipping ministry official said.

DCI wrested the annual maintenance dredging contract at Paradip Port Trust on nomination basis (without a tender) after the Port Trust scrapped a tender for the work in which Mercator Ltd had emerged the lowest bidder. Mercator’s bid was rejected due to some technical reasons, the official said.

DCI quoted the second lowest rate for the work which was some Rs 2 crore more than the rate quoted by Mercator. DCI, though, was given the work on nomination basis at the rate it had quoted and not at the lowest rate quoted by Mercator.

The Cochin and Paradip contracts give insights into the challenges facing the new owners of DCI, which has lost its central public sector undertaking (CPSU) status following the strategic disinvestment, which is seen as a convenient way to strip some of the cash reserves of the four port trusts.

MT Krishna Babu who was the chairman of Visakhapatnam Port Trust till May 11 and in that capacity the chairman of DCI after the strategic sale, had written to all the 11 major port trusts urging them to “consider” giving their annual maintenance dredging contracts to DCI on nomination basis (without tender) to help DCI raise its revenue and net profit.

“He (Krishna Babu) can request that but the port trusts may not consider it unless they get permission from the shipping ministry. Whether the shipping ministry has agreed with his decision to write to all the major ports trusts on this issue is not clear,” said an official with one of the major port trusts.

This is because the ministry has been advocating the tender route for finalising dredging contracts at major port trusts, which are autonomous bodies controlled by the ministry.

The ministry is currently drafting a standard operating procedure (SOP) for finalising dredging works at major port trusts. The draft SOP has recommended the tender route with a right of first refusal (RoFR) to DCI to take up the work if its price bid comes within the 15 per cent range of the lowest bidder.

The port trusts have been favouring open tenders for awarding dredging works with an eye on securing lower rates.

Between 2011 and 2017, Cochin Port Trust hired DCI for its annual maintenance dredging works on nomination basis, paying Rs 140-145 crore every year. ”We got a better rate last year because we went for open tender for the maintenance dredging work,” said a Cochin Port Trust official.

DCI quoted Rs 88.5 crore to take up the Cochin work compared to a budget of Rs 123 crore estimated by the port trust.

DCI later told the port trust that it had miscalculated the work scope to quote the lowest rate and the matter was referred to the dispute resolution mechanism in the government which is yet to give its verdict.

This year, DCI quoted Rs 83.89 crore for the annual contract compared to a budget of Rs 114 crore set by Cochin Port Trust, reducing its chances of getting a favourable verdict from the dispute resolution body.

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Published on May 19, 2019
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