Exciting Times Ahead: Increase in dredging activity at ports and NWs

Increase in dredging activity at ports and NWs

Dredging is an important part of developing and maintaining ports and inland waterways. Keeping this in view, the government has taken a number of initiatives for promoting growth of the dredging segment.

The Dredging Guidelines for Major Ports, 2015, brought clarity to various issues that earlier resulted in disputes and arbitrations and thus delayed dredging projects. Amendments to the guidelines for chartering foreign flag dredgers, easing the process of vessel registration, etc., are some other important initiatives that have been taken.

Revised dredging guidelines were issued in January 2018 to enhance the validity period of the security clearance given to bidders/companies participating in dredging projects in the major ports from three years to five years, at par with the validity period followed by the Ministry of Home Affairs.

The Coastal Berth Scheme has been extended up to March 2020 and its scope has been expanded to cover capital dredging at the major ports. In 2019, the Central Water Commission came out with guidelines for sediment management (including dredging) in waterbodies and hydropower projects. These measures are expected to give an impetus to the dredging segment.

The disinvestment of the Dredging Corporation of India (DCI) augurs well for segment growth. Four ports – the Visakhapatnam Port Trust, the Paradip Port Trust, the Jawaharlal Nehru Port Trust and the Deendayal Port Trust – have taken a 73 per cent stake in the company. With this, DCI is expected to have more operational and financial freedom in decision-making.

During the five-year period 2013-14 to 2017-18, at least 458 million cubic metres (cum) was dredged at the major ports, while another 224 million cum was dredged at non-major ports. With a significant amount of dredging activity being undertaken, draught levels at Indian ports have increased. Most major ports have achieved a draught of at least 14 metres, while the draught level at Visakhapatnam port and Chennai outer harbour is 18.1 metres and 17 metres respectively.

Besides dredging at ports, from 2013-14 to 2016-17, around 4 million cum of capital dredging was undertaken at National Waterway (NW)-3. The Inland Waterways Authority of India (IWAI) too undertakes maintenance dredging for maintaining a pre-decided least assured depth at the three operational waterways – NW 1, 2 and 3. During the four-year period, a total of 3.42 million cum of maintenance dredging was carried out on these waterways.

In the past year or so, there has been an increase in project activity. In 2018, the cabinet approved an addendum to the Protocol on Inland Water Transit and Trade, under which 470 km of rivers will be dredged and will be jointly financed by Bangladesh and India. The rivers will be dredged from Zakiganj in Sylhet district (Bangladesh) to Ashuganj and Sirajganj in Bangladesh and to Doikhawa in India. India will provide 80 per cent of the total dredging cost, while Bangladesh will cover the remaining 20 per cent.

A number of dredging contracts have been recently awarded. In August 2019, the New Mangalore Port Trust awarded a dredging contract to DCI to carry out post-monsoon dredging at the port. In May 2019, DCI secured annual maintenance dredging contracts from the Paradip Port Trust (on a nomination basis) and the Cochin Port Trust (through a tender). In 2018-19, the Paradip Port Trust awarded river mouth dredging of the Mahanadi river at the Paradip fishing harbour to Reach Dredging Limited for Rs 150 million. Meanwhile, IWAI has awarded three dredging contracts worth Rs 4.92 billion to Adani Ports and Special Economic Zone Limited through performance-based dredging under the Jal Marg Vikas Project.

In terms of equipment deployed, Netherlands-based IHC Merwede is the leading supplier of dredging equipment in India. The scope of work for equipment suppliers has evolved and expanded over the years. Apart from supplying equipment, companies are now also providing services such as total logistics support, on-site assembly, technical assistance, etc. The experience of Indian shipyards in the manufacturing of dredgers and dredging components is fairly limited. Most of the technology transfer arrangements made for the construction of dredgers in India have met with limited success or no success at all.

The potential for the dredging segment is vast. As part of the government’s flagship Sagarmala programme, 263 projects worth Rs 1.4 trillion have been identified under the port modernisation component to increase port capacity from 1,400 million tonnes per annum (mtpa) to 2,500 mtpa by 2025, and this is expected to drive the demand for dredging. In the inland waterways segment, by 2022, an initial dredging quantity of 88 million cum is estimated for select NWs along with recurrent dredging of 22 million cum per year.

However, the sector continues to struggle with various issues such as a complex tax structure, lack of standardisation of contracts, inaccurate assessment of project costs and the quantity to be dredged, lack of repair facilities, and shortage of trained personnel to undertake dredging operations. Once these are addressed, the sector is expected to grow by leaps and bounds with the increased focus on port and waterway development.