Bangalore: The government has decided to look for a joint venture (JV) partner from the private sector to bail out ailing state-owned shipbuilder Hooghly Dock and Port Engineers Ltd (HDPEL) and allow it to participate in the ongoing ship-building boom in the country.
A committee of secretaries, headed by the cabinet secretary, recommended this plan while considering a Rs393.61 crore financial restructuring package for the country’s oldest shipbuilder based in Kolkata.
Creating infrastructure: A shipbuilding facility in Gujarat. Photograph: Ashesh Shah / Mint
The plan includes writing off the government’s loan to the company, including interest.
“We are in the process of drafting the terms of reference for the induction of a JV partner in HDPEL,” a shipping ministry official said. He did not want to be named because he is not authorized to speak to the media.
An HDPEL spokesman declined to comment.
HDPEL, a small-size shipbuilder capable of constructing ships with maximum cargo carrying capacity of 15,000 tonnes, has two units at Salkia andNazirgunge on the banks of river Hooghly in Howrah near Kolkata.
Both units have the infrastructure to build various types of vessels such as tugs, dredgers, floating dry-docks, fishing trawlers, oil pollution control vessels and passenger ships.
The company’s ship repair division at Salkia can handle small and medium size vessels and other marine craft, while its facilities at Kidderpore dock and Haldia can attend to emergency repair and refitting jobs.
The hunt for a private joint venture partner is the latest attempt to revive the company.
HDPEL was set up in 1819 as a private sector company called Hooghly Docking and Engineering Co. Ltd.
Subsequently, Port Engineering Works, a unit of Andrew Yule and Co. Ltd, was merged with Hooghly Docking to form HDPEL.
As both the Salkia and Nazirgunge units were suffering heavy losses due to a lack of fresh investment and modernization, the Union government nationalized the company in 1984.
It expected to use the available infrastructure through necessary investment for modernization, and increase the capacity for shipbuilding and ship repairing in the country.
The erstwhile Disinvestment Commission, which was set up to suggest ways to sell stakes in state-owned firms, had recommended the privatization of HDPEL.
Since the company was nationalized through an Act of Parliament, it could be privatized only after legal approval, the commission had said.
It had suggested that the government offload its entire stake in the company to a strategic partner after finalizing a financial restructuring package in consultation with the prospective buyers.
If the government failed to find buyers, it should shut down HDPEL, the commission had said.