Why is Shipping Ministry intent on Setu dredging, ignoring other marine/port projects?

Why is Shipping Ministry intent on Setu dredging, ignoring other marine/port projects?

Dredging projects remain on paper despite plan support
7 Jan, 2008, 0022 hrs IST, TNN (Economic Times)

Dredging sector seems to have received the least attention during the 10th Five Year Plan period as none of the major port deepening projects envisaged for the time frame has taken off. Quite oblivious of the reality, the present 11th 5-Year Plan (2007-12) plan document talks eloquently of the need for ‘substantial capacity augmentation at major and minor ports’.

“Keeping in view the present trend, it is estimated that the Indian ports will have to handle cargo traffic of about 800 million tonnes (MT) by 2012 as compared to 520 MT handled in 2004-05,” noted the document, before adding, “This would require substantial capacity augmentation at major and minor ports. A deep sea port will be developed and drafts of existing ports will be deepened, where feasible, through capital dredging.”

According to both local as well as foreign dredging company professionals, none of the deepening projects of the last Five Year plan has been taken up for execution. “Dredging works at places like Kolkata, Haldia were going on for the last so many years, but most of the dredging plans of almost all major ports are still at the bidding stage,” said an executive of a dredging major, who do not want to be named.

For example, like many other port projects, Jawaharlal Nehru Port channel dredging project has been hanging fire for quite some time. According to sources, today the primary reason is said to be the dredging cost which has gone up substantially over last 1-2 years, while the government estimates have been much below. While everyone rues the undue delay in clearing dredging project proposals, many of the port managements feel that the shipping ministry’s preoccupation with Sethusamudram project as the cause for delay. “The ministry seems to force dredging companies to work at Sethusamudram before taking up any other work,” said a port official on condition of anonymity.

Dredging company officials with whom ETSL interacted denied any use of force, but conceded, “There is no pressure, but the wishful thinking is that let somebody come and do it,” said an official. He clarified that companies are not in a position to work at Sethusamundram as equipment offered earlier were now committed to other projects else where.

After the Sethusamudram came up and the way it got stuck up, the ministry seems to have no time for other projects, he said.
“Due to cost escalation and huge demand there is an upward revision in project costs which has to be approved by the planning commission. Due to this, if not all, many of the project proposals are at the revision stage,” said T Vijaymurthy, director of Van Oord india, one of the leading dredging companies in India.

“Trade is suffering hugely,” said another executive, “because of the delay and the kind of benefit that ports could have enjoyed has not materialized.”

However, no dredging company is sitting idle and complaining. “Every dredging company, even those that have came into the sector without knowing anything is quite busy,” said a dredging contractor. All private ports are taking off pretty well with lethargy of the government and the ports it supposed to be managing, he added.
Mohanlal Kewalramani of Jaisu Shipping, said, “We have dredging work pending in India worth more than Rs 5000 crore and our capacity is only about Rs 1000 crore.”

Mr Kewalramani said that tonnage tax regime has helped dredging companies to purchase new dredgers. Even though there are many new companies which have joined the sector, it would not mean Indian dredging gathering more muscle, believes Mr Kewalramani.
According to him, unless India changes the policy environment to help local dredgers, these new companies will die a natural death.
Though there are many people coming into the sector they are not dredging companies but only owners who bought dredgers. “Dredging work is not done on the basis of ownership. It is contract work and not chartering like in shipping,” he said.

According to him, the system of bidding is heavily loaded against local operators. The issue is that their qualification system is wrong. The bidding document says a company should have done a particular value of work, which is very hypothetical. It should have been the quantity of work that had been executed.

He also allege that the bidding processes are not getting over because of the existence of a cartel in the sector.

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