Private ports assail dredging order

Private ports and terminal operators are upset with the shipping ministry's three-year dredging policy that virtually forces them to place their dredging contracts with the state-owned Dredging Corporation of India (DCI).

The new dredging policy takes effect from April 1, 2004. It stipulates that DCI will undertake dredging for the Kolkata Port Trust. All other ports will have to invite bids for dredging.

"DCI shall have the right of first refusal under Section 406 and 407 of the Merchant Shipping Act if its rate is within 10 per cent of the lowest technically qualified offer.

The policy would be applicable to both maintenance and capital dredging works, including capital dredging requirement of the KoPT," the policy states.

This means that even when DCI's bid is ten per cent more than other dredging companies, all Indian ports will have to place the order with DCI.

The private port and terminal owners "" mainly from Gujarat as the state has two private ports and terminals apart from two more private ports that are being developed "" have under the banner of Association of Gujarat Private Ports and Terminals (AGPPT) urged the Ministry to change the guidelines on dredging for minor and private ports.

They are seeking the freedom to decide on the dredging contractor, foreign or otherwise.

AGPPT has also indicated its apprehension over the possibility of rising dredging costs as DCI will almost have monopoly power.

"AGPPT is disturbed by recent developments involving the Ministry of Shipping's guidelines to chairmen of all major ports wherein the Director General, Shipping, has been asked to intervene in the working of minor and private ports and ensure that foreign dredging companies are allowed to dredge only if they have gone through a competitive bidding process.

"These guidelines (issued on February 17, 2004) will have an adverse impact on minor and private ports as these ports have the advantage of circumventing the long-drawn bidding process and award dredging contracts across the table," said Sanjay Gupta, president of AGPPT and chief executive officer (CEO) of the Adani Group which handles the private port Mundra in the Kutch district.

"With the new guidelines, if the DCI demands Rs 110 for each cubic metre of dredging against Rs 100 for dredging one cubic metre by any private company or foreign company, we will still have to award the contract to DCI.

"For the new ports coming up, like Shell's multi-cargo port in Hazira or Petronet LNG's port in Dahej, the companies need a lot of capital dredging and so their expenses will be much higher because of the new guidelines. This will discourage private parties to invest in the port sector," said a source close to Gujarat Pipavav Port (GPPL).

Even the minor ports handled by the government will have to bear the higher costs for dredging because of the new guideline. Interestingly, the new guidelines were issued only nine days before the DCI public issue opened on February 26.