1. Despite decline in revenue, Dredging Corporation of India to buy vessels for KoPT

Despite decline in revenue, Dredging Corporation of India to buy vessels for KoPT

Dredging Corporation of India (DCI) will acquire new dredging vessels to conduct offshore dredging in the riverine channels of Haldia under the Kolkata Port Trust despite the fact that dredging revenue from KoPT is on a decline because of lower maintenance dredging.

By: | Kolkata | Updated: November 6, 2017 5:26 AM
Dredging Corporation of India kopt deal, Dredging Corporation of India kopt agreement, Dredging Corporation of India kopt trade ties Almost 55% of DCI’s revenue derived from KoPT’s dredging, which started declining after KoPT opted ship’s movement using the Eden Channel instead of the Auckland channel.

Dredging Corporation of India (DCI) will acquire new dredging vessels to conduct offshore dredging in the riverine channels of Haldia under the Kolkata Port Trust despite the fact that dredging revenue from KoPT is on a decline because of lower maintenance dredging. Almost 55% of DCI’s revenue derived from KoPT’s dredging, which started declining after KoPT opted ship’s movement using the Eden Channel instead of the Auckland channel. DCI has decided to procure a new dredger for KoPT to save on time and operational cost. KoPT’s newly-appointed chairman Vinit Kumar said as of now DCI dredgers pick up silt from the river bed and carry it up to the Nayachar island to dispose it. Earlier, the dredged materials were disposed out of the shipping channels into the river only for which the dredged materials flowed back to the channels with the tide. Therefore, there was no depth guarantee achieved. Later, KoPT started offshore dredging and disposed the dredged material to the nearby Nayachar island. Kumar told FE that cutting the silt from the river bed and then carrying it to the Nayachar island for disposing takes around 2 hours. So, DCI has planned of acquiring a new dredger, which would cut the silt and dispose it through a pipeline. The dredger would cost DCI around Rs 515 crore. IIT Chennai was conducting a study to lay a pipe between the dredger and Nayachar, Kumar said. However, this would have no financial impact on KoPT since KoPT paid DCI on the basis of depth achieved. Prior to 2014, DCI was the only dredging company nominated by the shipping ministry for servicing the port. Post 2014, the nomination process ceased to exist and KoPT opted for competitive bidding.

DCI used to dredge 24 million cubic metre (mcm) per year by deploying six dredgers at Jellingham, Auckland bars. Boston Consulting Group suggested KoPT to shift the dredging from Auckland channel to Eden channel. This reduced the port’s annual dredging cost by Rs 150 crore. Under the new contract, maintenance dredging has been reduced to about 8 mcm per year by deploying three dredgers, for which dredging revenues have been subdued. Coupled with that constant pressures from the centre on the KoPT to reduce dredging cost has been the principle driver to lower dredging.

KoPT’s dredging subsidy reduced from a level of Rs 400 crore in FY 10 to Rs 260 crore in FY15. This further reduced to Rs 162 crore in FY 17, although KoPT incurred an expenditure of Rs 382 crore. In the current fiscal, the cost of dredging is expected to be Rs 372 crore but the shipping ministry has so far provided only Rs 164 crore, which is likely to touch Rs 180 crore this fiscal, Kumar said, adding, “ a higher subsidy enables us to save on cost and put the money into other infrastructure development.”

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