Dredging a revenue channel – the Hindu BusinessLine
Dredging Corporation of India Ltd (DCI) has sought government approval to take over management of the Indian-funded Myanmar deepwater port of Sittwe, as part of its plans to explore new sources of revenue, a declared an official of the company.
The management agreement for the port of Sittwe would be finalized through a bilateral agreement between India and Myanmar. This will be DCI’s first overseas mission – India’s largest dredging contractor – to the port sector, a company it has identified for expansion due to synergy with its core dredging business. .
The company is also looking to harness the expertise of its four state-run port trusts – Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust – while venturing into port management.
In addition, DCI is considering equity capital in new ports being developed in India. The Visakhapatnam-based company will not choose equity capital directly in the new ports.
“The new ports will require dredging (channel deepening), which represents 20 to 25% of the total cost of the project. Instead of taking money for capital dredging, we are planning to take stock in the port, ”the official said.
This will not only generate dividends, but will also help DCI to carry out the annual maintenance dredging works as a shareholder of the port.
“Wherever dredging is a component, we try to capitalize on our strengths,” the official said, noting that DCI was in talks with several port developers for potential capital partnerships.
“Entering the port management sector is also part of an expansion plan towards other income-generating avenues,” he added.
The deepwater port of Sittwe is part of the $ 484 million Kaladan multimodal transport project built by India, which is ready to go into operation.
The project aims to reduce the cost and time of transporting goods to the landlocked Mizoram.
The goods will be transported from the Port of Calcutta to Sittwe by sea and then to Paletwa in Chin State via the Kaladan River, from where they will be transported by road to Mizoram.
New standards for contracts
DCI recently received a big boost with the Ministry of Ports, Navigation and Waterways approving new standards that allow the four port shareholders controlling DCI to finalize their respective dredging contracts with the company on a nomination basis ( without invitation to tender).
The ministry said it also reserves the right to cede to DCI, in the public interest, any contract for dredging work at any major port on the basis of an appointment.
DCI, listed in Mumbai, is also about to sign a contract with Cochin Shipyard Ltd to build two high-end, high-capacity dredges for nearly 2,000 crore.
The Cochin Shipyard will build the two trailing suction hopper dredgers (TSHD), with a capacity of 12,000 cubic meters each, through a technological collaboration with IHC Holland BV, the world’s largest dredge builder. TSHDs are used to maintain port channels.
DCI owns 10 and they meet 70 to 75 percent of the annual dredging needs of major Indian ports.
“To meet the growing demand for dredges across the country, DCI plans to expand its fleet with the construction of two high capacity hopper dredgers,” said the official.
The dredge construction contract with Cochin Shipyard will have an option to purchase a third dredge, depending on the performance of the first two dredges and market demand.