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Government changes tack on plan to build new shipyards

Government changes tack on plan to build new shipyards

Mumbai: The shipping ministry has asked two state-owned shipyards to carry out feasibility studies and help build two new shipyards, one each on the east and west coast, three years after two government ports were told to do the job, and four years after the idea was floated.

Shipping secretary A.P.V.N. Sarma told Mint at a shipping summit in Mumbai that the Kochi, Kerala-based Cochin Shipyard Ltd and Visakhapatnam, Andhra Pradesh-based Hindustan Shipyard Ltd have been tasked with the work.

“I cannot deny that it is a late realization on the part of the government," Sarma said. “We believe that shipyards are better suited for the job for finding locations and setting up shipyards than ports."

In August 2005, the government planned to establish two shipyards capable of building and repairing large oil tankers with carrying capacity of 300,000 tonnes at a total estimated cost of Rs7,195 crore.

A year later, the shipping ministry asked state-run Indian Ports Association to implement the shipyard plan and subsequently decided that the Mumbai Port Trust and Ennore Port Ltd will act as nodal agencies to set up the shipyards, including inviting expressions of interest. That decision has now been scrapped.

“This epitomizes the attitude of the government towards the shipping sector," a person familiar with the development said. “The government has now realized that shipyards, not ports, are best suited for this job." He did not want to be identified since is he associated with the feasibility study and technical analysis for the government on these projects.

“However, no budgetary allocation has been made for the two (proposed) yards," the shipping secretary said. “It’s a vision at this stage."

Jesper Kjaedegaard, partner with UK-based logistics and infrastructure advisory firm Mercator International Llc, said there is no business case at present for two new shipyards in India.

“Why do you want to build a yard, when ships are available at cheap prices?" Kjaedegaard asked. “Average ship prices are at a 10-year low."

India has 27 shipyards, of which six are owned by the Union government. The country has a share of less than 1% in the global shipbuilding market.

Sarma admitted that shipyards worldwide are facing a tough time because of the global slump but maintained that “it is time to build infrastructure now".

State-run enterprises such as Shipping Corp. of India Ltd, Jawaharlal Nehru Port Trust, Mumbai Port Trust, Kolkata Port Trust and Cochin Shipyard Ltd had floated an alliance three years ago to build ships. That initiative is yet to get off the ground.

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