Port trusts must share dredging costs: Plan panel

The Planning Commission is likely to recommend as part of its report on capital dredging that port trusts share the deepening costs at ports with the government.

The commission is in the process of firming up its plan which is contrary to the private sector's demands on the capital dredging issue. The private players want the expenses to be borne by the government.

The shipping department also wants the government to fund half of the dredging expenses. Department officials pointed out that capital dredging was highly investment intensive with low returns due to which the private sector did not want to shoulder its cost.

"The government will contribute through viability gap funding, and in the absence of private sector participation port trusts can also contribute," a senior Planning Commission official told Business Standard.

Under viability gap funding, the government support can be up to 20 per cent of the project cost.

Recently, the Jawaharlal Nehru Port Trust's proposal to get a waiver of around Rs 700 crore on its interest liability to the government for funding its dredging project was rejected.

The port now plans to raise funds for its Rs 650 crore dredging project through market borrowing. The plan panel is of the opinion that the port trusts are capable of funding dredging on their own. The officials said port trusts could recover costs by increasing vessel-related charges.

With more depth larger vessels can dock at the ports. The investment in dredging can be factored in costs while requesting a tariff hike from Tariff Authority of Major Ports.

Dredging will deepen the inner harbours, in turn facilitating bigger ships to come in and berth. '"We will be finalising the terms and conditions within the next three months," a Planning Commission official said.

Officials of the shipping department said the problem with such an arrangement was that more than one port benefited from deepening of the channel and it was difficult to divide the costs and benefits for the purpose of framing tariff proposals.

The officials said the port trusts should fully fund the deepening of the underwater embankment at the shore. However, the channel deepening costs should be borne by the government.