Van Oord Revalidates Bid for JNPT Dredging

Monday, April 21, 2008

The Dutch dredging giant Van Oord has once again revalidated their one-year bid for the Jawaharlal Nehru Port Trust channel dredging contract. However, the company has clarified to the government that it is difficult to carry out the contract at the bidding amount, with the rise in the inflation rate and the various cost escalation, and requested it to re-evaluate the contract amount with regards to the foreign exchange variation.
The Rs 800 crore contract was close to be awarded to Van Oord in April 2007, for dredging and widening of the main harbour channel of JNPT.
According to a senior Van Oord official, the company is willing to carry out the contract whenever the government gives a go ahead for the project. "The only request placed by the company to the government is to reevaluate the contract amount in regards to the foreign exchange variation," said the official. The project has been held up due to delay in receiving final clearance from the shipping ministry.
Some sources believe that the ministry was not happy that the lowest bid overshot the port's estimate, while others feel that it is not too pleased with the idea of a foreign dredging house handling such a crucial project.
When contacted, JNPT officials refused any further comment saying that they have not yet received any word from the government on the project.
According to sources, the port authorities would not want to go for re- tender as the process takes a long period of time. Secondly keeping in mind the cost factor, the bidders will definitely revise their bidding amount for the new bid.
To accommodate larger vessels, the port had proposed to deepen the draught of the 35-km long channel to 14 m and later to 15 m. For dredging and deepening the habour channel the port in 2006 short listed Van Oord BV and Boscalis of the Netherlands, Jan de nul of Belgium and Dredging International.
The port took up the evaluation of the bids after opening the price bids on April 10, 2007. During the ports board meeting on July 19, 2007 the work was awarded to the lowest bidder, Van Oord. The proposal was then submitted to the shipping ministry for their approval.
The dredging of the channel has now become critical for JNPT, as bigger container vessels are being deploying by shipping lines for gaining economies of scale. With the trend shifting towards large-sized container ships, draught has become an important factor in the choice of port by the shipping lines.
At present, the port draught is 10.2 m and vessels having a draught of 12.5 m have to navigate the JNPT channel, making use of the tidal window. This might cause JNPT to loose out on cargo ships in the future, say industry officials.
Source: Economic Times