Digging Deeper

Dredging trends at major and non-major ports

With Indian ports undergoing rapid ex­pansion, there is an increasing dred­ging requirement in the country. Fur­ther, following the expansion of the global shipping fleet, in terms of size as well as capacity, Indian ports have realised the importance of deeper berths and channels. Deeper berths and channels can accommodate bigger vessels, attract more cargo and thereby increase revenues. With significant dredging activity taking place, draught levels at some Indian ports have also increased. Most major ports in the country have achieved a draught of at least 14 metres. However, this is still substantially low in comparison to international standards.

Background

India has a long coastline of almost 7,500 km. The first port commissioned in the country was Calcutta port in the 1870s, followed by the Mumbai and Madras ports. At present, the country has 12 major ports and nearly 200 non-ports (including minor, intermediate and captive ports) located across the nine maritime states. Of these, 66 are fully operational and located on the coasts of Gujarat, Andhra Pra­desh, Goa and Maharashtra. These ports requ­ire annual maintenance dredging to sustain their business, economy and environment.

Capital and maintenance dredging at major ports

The Maritime Agenda 2010-20 suggests that Indian ports should work on achieving a draught of at least 14 metres and up to 17 metres. Of the 12 major ports owned by the government, 10 have already achieved a minimum draught of 14 metres. Kolkata port is an exception as it is a riverine port. The dredging carried out at major ports in 2019-20 stood at 84.97 million cubic metres (mcm) while in 2018-19 it stood at 85.94 mcm. In monetary terms, the expenditure incurred was Rs 11.28 billion in 2019-20 and Rs 18.41 billion in 2018-19. The difference in expenditure between the years is on account of the capital dredging of the Jawaharlal Nehru Port Trust in 2018-19, which entailed an investment of Rs 9.95 billion. As of November 2021, maintenance dred­ging works are being carried out at Cochin port, Paradip port, New Mangalore port, Visakha­patnam port and Deendayal port (both capital and maintenance dredging is being carried out at the port).

Government initiatives

The four key government initiatives that have led to further development of the dredging sector are the Sagarmala programme; the Natio­nal Waterways Act, 2016; the New Model Conces­sion Agreement, 2021 and the Dredging Guidelines for Major Ports, 2021. Sagarmala, launched in July 2015, is one of the most ambitious government programmes for the port sector till date. As of March 2022, 802 projects entailing an investment of Rs 5.49 trillion have been identified for implementation across the four pillars of the programme – port modernisation and new port development, port connectivity enhancement, port-linked industrialisation and coastal community development. Of these, 194 projects worth Rs 990 billion have been completed, 218 projects worth Rs 2.13 trillion are under implementation, while the remaining are at various stages of development.

The National Waterways Act, 2016 has declared 111 inland waterways as national waterways (NWs) in the country to promote shipping and navigation on them. The total length of the NWs is 20,275 km, spread across 24 states in the country. Dredging works have commenced for inland waterways and they are currently based on depth guarantee. These projects are being administered by the Inland Waterways Authority of India.

According to the Ministry of Ports, Shipping and Waterways (MoPSW), there are more than 80 public-private partnership (PPP) projects in the sector with an investment of over Rs 560 billion at various stages. The Revised Model Concession Agreement, 2021 for PPP projects at major ports states that 31 projects worth over Rs 146 billion will be awarded till 2024-25. The Model Concession Agreement, 2021 is expected to improve the confidence of developers, investors and lenders in the port sector and catalyse investments.

Dredging guidelines with standard operating procedures were issued by the MoPSW in August 2016 for undertaking capital and maintenance dredging. They were recently revised in 2021 because of the introduction of many new technological systems on survey and investigation for capital dredging projects, to ascertain that the estimation of project cost is based on acceptable international standards by major ports or the schedule of rates by the state maritime administration. The revised gui­de­lines also provide a fair and equal opportunity to new en­trants in the dredging industry. It is also essential that the concepts of assured de­pth contract, engineering, procurement and construction contract, annuity/hybrid an­nuity models are introduced in the dredging se­ctor. Further, applications of dredged ma­t­e­rial should be adequately explored.

In sum

The Government of India has formulated a number of policies for the growth of the dredging market. The policies encourage all companies. At major as well as non-major ports, the work is primarily focused on maintenance dredging. The Indian dredging fleet is inadequate to take up capital dredging works. Indian dredging companies also lack the know-how and infrastructure capability for rock dredging. One of the key issues faced by these companies in India is insufficient support and inadequate ancillary equipment availability. Further, risk sharing is not done in a fair manner, which leads to disputes. Further, contract conditions suited to the Indian Contract Law for dredging works are yet to be formulated.

Going forward, the demand for dredging is expected to remain robust. In light of the ca­pa­city augmentation plans at existing ports, up­co­ming greenfield ports, increasing requirement for land reclamation and the government’s plans to develop inland waterways as an alternative mode of transport, the outlook for the sector seems positive. The dredging demand in the future is expected to largely come from ports given their significant capacity augmentation plans.  w

Based on a presentation by
Captain Rajesh Malhotra, Consultant, Dredging Solutions, at a recent India Infrastructure conference

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