Bangalore: In a setback to foreign trade, India’s biggest container cargo port will have to wait till 2014 instead of 2010 to complete deepening of its channels to allow bigger ships coming in, as the port authorities have scrapped a dredging tender.
“We will invite fresh bids for the channel deepening project soon,” said an official of the state-owned Jawaharlal Nehru (JN) Port who declined being named because he is not authorized to speak to the media. A Union shipping ministry official confirmed the development. A spokesperson for Van Oord Dredging and Marine Contracting Co. NV, which had emerged as the lowest bidder, declined to comment.
Expansion delays:The Jawaharlal Nehru Port in Mumbai. The channel deepening project is key to the port’s plan to develop a new container terminal, the port’s fourth, to overcome capacity constraints
The port’s decision came 15 months after the Dutch dredging firm, one of the biggest in the world, quoted the lowest bid of Rs920 crore in October 2006 and almost four years after the tender to increase the port’s depth was floated in 2004. The authorities, which had expected the work to cost about Rs800 crore, opened the bids in April 2007.
The port near Mumbai handles about 60% of the country’s container cargo of about 7 million TEUs, or twenty-foot equivalent units. A TEU is the industry’s standard unit for measuring the container volume.
Calling for bids again will further delay the project, which is now slated to be completed by 2014 instead of in 2010, as estimated earlier, said an industry official who did not want to be named. “The rates in the fresh tender will also be much higher as the global dredging market has firmed up due to a shortage of equipment to take up the work,” he said.
Dredging costs have become expensive in the past two years as ports are expanding rapidly all over the world, and offshore land reclamation work in the Gulf region has led to a shortage of dredgers globally.
“Dredging costs have gone up by about 75% in the last two years,” Philip Littlejohn, managing director of privately held Gujarat Pipavav Port Ltd, had told Mint earlier.
The port cancelled the tender after Van Oord linked an extension of the bank guarantee beyond 18 July—the fifth such extension—to a revision in prices to reflect the variations in the euro-rupee exchange rate and inflation since the bid was placed in October 2006.
As much as 60% of the Rs920 crore quoted by Van Oord was linked to the euro-rupee exchange rate prevailing in October 2006. Dredging International was second lowest in the bidding at Rs1,061 crore and Royal Boskalis Westminster NV was third at Rs1,116 crore.
JN Port wants to increase the depth of its channel to allow bigger container ships to call, thus benefiting India’s foreign trade. The channel deepening project is key to the port’s plan to develop a new container terminal, the port’s fourth, to overcome capacity constraints it faces.
The container cargo at the port grew 23% to 4.06 million TEUs in the 12 months to March and is operating at more than its designed capacity. Its three container handling facilities are designed to handle only 3.6 million TEUs. The port cannot handle more cargo unless it builds more terminals for which dredging is vital.
The port is currently not deep enough at 12.5m and can handle only up to 3,000-TEU capacity ships. This in itself is difficult, and the port manages it by ensuring these ships enter it at high tide.
It also handles bigger ships, but these enter only after off-loading some of their cargo elsewhere to reduce weight and draft requirements. This underutilization of capacity results in losses to shipping lines. The port plans to deepen the channel to 14m from the existing 12.5m to enable 6,000-TEU capacity vessels to berth.
Dredgers are used to increase the depth of the channel through which ships approach a port.