Digging Deeper

Key features and expected impact of the Dredging Guidelines, 2021

The Dredging Guidelines, 2021 are a combination of various policies, guidelines and provisions, which provide a roadmap of dredging activities for the next 10 years. The gui­delines promote sustainable dredging using modern dredging techniques. The new dredging guidelines were laid out with the aim of in­cor­po­rating the latest technological systems for survey and investigation of capital dredging projects, as­certaining project costs on the ba­sis of ac­ceptable international standards, and ensuring the reuse of dredged material, among others.

Indian Infrastructure takes a look at the salient features of the new guidelines, their expected impact and the way forward for the Indian dredging market…

Salient features and expected impact

The first set of comprehensive dredging guidelines was formulated by the Ministry of Ports, Shipping and Waterways (MoPSW) in August 2016. Recently, in order to improve project im­plementation, increase the cost effectiveness of projects, ensure timely completion and meet the international code of standards, MoPSW rolled out the new Dredging Guidelines 2021, providing a roadmap for the next 10 years. The Dredging Guidelines 2021 envisage dredging of around 3 billion cubic metres (bcm) (1.6 bcm capital dredging and 2.4 bcm maintenan­ce dredging) over the next 10 years. The guidelines apply to dredging projects across all ma­jor ports and naval dockyards in India. At present, 120 million cubic metres (cum) of dredging is being carried out annually at major ports and dockyards in the country.

The Dredging Guidelines, 2021 have introduced a number of new aspects including standard operating procedures for planning and pre­paration, standardised procedure for estimating the cost of dredging projects, tendering of dredging projects and the monitoring mechanism to be followed.

With respect to the standard procedure to be followed, the new guidelines have charted out a generic roadmap for the implementation of dredging projects. The roadmap should be created at the beginning of the planning exercise. Be­sides, the bathymetry; soil or sediment type and its characteristics; possibility of reuse of dred­ged material; disposal and/or reuse site; dredging quantity; and cost estimates must be ass­e­ss­ed and established at the planning stage it­self. The guidelines aim to standardise the current survey activities undertaken for dredging and encourage the adoption of the latest technology including hydrographic surveys, geo-technical surveys and topographical surveys.

Focus on sustainable dredging

One of the key highlights of the guidelines is the adoption of the environmental code of pra­c­tice for dredging and reuse/recycle of dred­ged material with the ultimate goal of shifting to sustainable dredging activities. Environ­me­nt-friendly dredging is expected to be a permanent element in dredging projects. To this end, the identification of dredging projects with the most appropriate disposal option for dred­ge material for a duration of up to 10 years (2020-2030) is critical. The Dredging Guide­lines, 2021, promote sustainable dredging using modern dredging techniques. The recycling of dredged material should also be included in the bid documents of dredging projects. A few major ports have already made efforts to reuse the dredged material. For instance, at Visakhapatnam port, more than 60 per cent of the dredged material from Outer Harbour is us­ed for beach nourishment while the rest is disposed of in the open sea.

Involving project management consultants for capital dredging projects

Highlighting the crucial role of project management consultants (PMCs) in the success of a project, the guidelines envisage the incorporation of an effective project monitoring and control team, either from the third party or the port’s own employees. Accordingly, all major ports should have a PMC for capital dredging projects. One of the key functions of PMCs will be to continuously monitor and provide feedback to the port about dredging operations and take the necessary corrective and preventive action for any delays, which may arise during the contract period.

Ensuring transparency in the dredging process

As per the new guidelines, all major ports are required to maintain transparency in the dredging process for maximum efficiency. It is advised that they maintain comprehensive data on dredging projects at their websites and furnish the same to the Indian Ports Asso­cia­tion (IPA). The data uploaded should include specifics of the hydrographic survey consisting of maps of suitable scale, geotechnical data containing the bed material based on geotechnical investigation in the channels, basin, ber­th­ing area and other operational areas. The web­site should also provide details on payments made to the contractor for the volume of work done and also pending works to be undertaken with the timeline. In addition, major port trusts are required to submit a five-year dredging plan to MoPSW and IPA. A dispute resolution committee consisting of dredging experts, an officer from the major port and a representative of the dredging company should be constituted by the port for resolving disputes, if any, to avoid arbitration and court cases.

Project tendering: PPP mode seen as a potential option

The new guidelines encourage providing fair and equal opportunity to new entrants. Acc­or­dingly, the new entrants can bid for a project in collaboration or in a joint venture with a larger dredging company. Major ports can award projects by nominating directly to the port-owned Dredging Corporation of India. They are also now allowed to invite open competitive bids for the award of dredging contracts. As per the gui­de­lines of the Aatmanirbhar Bharat progra­m­me, any tender worth less than Rs 2 billion ne­eds to be awarded to a domestic company.

The Dredging Guidelines, 2021, have clearly defined points for a public-private partnership (PPP) model for dredging works. Signi­fi­cant capital dredging is required at major ports over the next few years to handle the anticipated container vessels of size 20,000 twentyfoot equivalent units and bulk cargo carrying Ca­pe­size vessels. Hence, the PPP model is envisaged as a potential option for major ports with limited investment so as to ensure funding from private agencies. The PPP mode in capital dredging can be advantageous as dredging can be taken up as a service requirement for the project and the operation burden on the port authority will be minimum. The detailed steps to mitigate potential risks and ensure project viability throughout the concession period have also been laid out. At present, two committees – one at the Niti Aayog level and another at the MoPSW level – are working on the modalities of the PPP model for tendering dr­edging projects. A report on the same is ex­pected to come out in a couple of months.

Furthermore, the guidelines suggest that the PPP model could be worked out with the hybrid model while combining capital dredging with maintenance dredging for a period of 10-20 years. The revenue share between major ports and PPP operators can be the bidding pa­rameter for floating the PPP projects. The existing PPP operators of the berth are expected to share the proportionate cost based on the volume of cargo handled and the berths operated by major ports themselves.

The adoption of the PPP model is expected to greatly reduce the burden on ports due to rising traffic volumes and increasing financial constraints. However, it is speculated that such projects would only attract large infrastructure developers such as Larsen & Toubro, Lanco Infratech and Dubai-based DP World as most financiers without adequate financial resour­ces will not be keen on funding these projects.

Future outlook

The Indian port sector offers a plethora of op­portunities in the dredging segment. The 3 billion cum dredging forecast is expected to create sizeable opportunities for various stakeholders in the dredging market. Furthermore, expansion/modernisation works at existing ports, development of new greenfield ports by major port trusts and maritime states, development of new waterways and deepening of existing waterways, etc., offer a gamut of opportunities to dredging contractors. Capacity addition at ports is expected to grow at a compound annual growth rate of 5-6 per cent till 2022, thereby adding approximately 275-325 million tonnes of capacity, thus increasing the need for increased dredging works.

The effective implementation of the Dre­d­ging Guidelines, 2021 would be crucial to meet this increased demand. It is also necessary to augment the existing fleet to meet the rising demand for dredgers.

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