Mumbai: India’s second largest private shipping company by fleet size, Mercator Lines Ltd, is close to acquiring a dredger, thus joining a growing list of Indian firms that are diversifying into this lucrative area of business.
“Mercator Lines has agreed to purchase a 2006-built trailer suction hopper dredger having a capacity to dredge 4500-5000 cu. m of material,” said a person familar with the deal who did not wish to be identified.
Mercator plans to register the Chinese built dredger under the Indian flag, added the person who declined to provide more details.
Mercator has offered the dredger to the state-run Dredging Corp. of India for hire and officials at India’s largest dredging firm based in the port city of Visakhapatnam have inspected the equipment, said a Dredging Corp. official who did not wish to be named because he is not authorized to speak to the media.
“We are looking at buying the dredger,” said Atul J. Agarwal, joint managing director, Mercator Lines. Agarwal confirmed that Dredging Corp. officials have inspected the vessel. “However, we are yet to take possession of the dredger,” he added.
Mint had reported on August 6 that Essar Shipping Ltd has acquired a new-built 4,500 cu. m capacity trailer suction hopper dredger to tap opportunities for dredging works at Indian ports and harbours.
A trailer suction hopper dredger is used for both capital and maintenance dredging requirements of ports and harbours.
In the case of capital dredging for creating new ports and harbours and to deepen the channels and berths of existing ports, a trailer suction hopper dredger works in tandem with a cutter suction dredger.
The cutter suction dredger cuts rocks and digs sand and soil, while a trailer suction hopper dredger collects the dredged materials and takes it to the deep sea or shore for dumping it.
A tariler suction hopper dredger is also used to maintain the required depths at ports for movement of ships. Indian ports silts very fast and, hence, require maintenance dredging throughout the year.
Apart from Mercator and Essar, entities such as Hindustan Infrastructure Projects & Engineering Pvt Ltd, state-run Shipping Corp. of India and Gujarat Maritime Board, the maritime regulator of Gujarat, have announced their intention to float dredging ventures attracted by the huge demand for dredging work at Indian ports and the Rs2,427 crore Sethusamudram Ship Channel Project.
The Sethusamudram Ship Channel Project involves dredging a ship channel across the Palk Straits between India and Sri Lanka.
India’s 12 major ports owned by the Union government have lined up investments worth Rs6,304 crore to deepen their berths and channels over the next three-five years.
Besides, ports owned by the state governments that have been given to private entities for development and operation also require dredging to allow ships to enter for loading and unloading cargo.
Dredgers are also covered under the new tonnage tax scheme, a tax based on the cargo carrying capacity (net tonnage) of a ship that lowers tax outgo of shipping firms when compared with the normal corporate tax.
The union government had nominated Dredging Corp. to undertake dredging of the Sethusamudarm Ship Channel Project after efforts to hire dredgers through two global tenders failed mainly due to the high rates quoted by dredger owners.
The cost of dredging works have gone up by 30-40% in the last 18-24 months as a spurt in port expansion projects globally and offshore construction-related land reclamation works in the Gulf region have led to a shortage of dredgers worlwide.
“The cost of dredging a cubic metre depends on the location, the type of material to be dredged and the distance from the dredging site to the dumping area,” said T. Vijaymurthy, director at Dutch dredging firm Van Oord Dredging and Marine Contracting Co.NV. According to the Dredging Corp. official, the current dredging costs ranges from about $2.5-3 per cu. m for maintenance dredging and $4 -5 for capital dredging.