VOC Port Authority Chairman S K Purohit is seeking to break the dominance of European dredging companies by tweaking a key qualification criteria for bidders in his latest attempt to execute a ?9,827 crore work for construction of breakwater, rock bund, wharf, dredging and reclamation on Hybrid Annuity Mode (HAM) for the ambitious container terminal project in the eastern port's outer harbour.

But his strategy runs the risk of contravening the India-EU free trade pact finalised on January 27, which commits to "Binding of dredging and maritime cable-laying services for the first time, satisfying key economic interests of the EU".

"Chairman Purohit just found the key to making this project successful after multiple attempts failed," said a dredging industry source. "If his gamble pays off, India will potentially find a solution to reduce its dependence on European companies for dredging works," he added.

Through the amendment to the tender terms, VOC Port Authority has dropped the experience clause relating to dredging and reclamation and instead brought in breakwater construction experience in India as the qualification criterion.

According to the cost bifurcation given in the Detailed Project Report (DPR) prepared by VOC Port Authority for the 19,827.20 crore work, dredging and reclamation is estimated to cost 26,523.62 crore, accounting for some 66.4 per cent of the total project cost. The balance 33.6 per cent of the project cost is for construction of breakwater, 2 km-long berth, rock revetment plus top side facilities like small buildings, substation, bollards, fenders etc. The breakwater construction alone comes to just $1,180.91 crore or 12 per cent of the total project cost and is not a majority scope in the tender.

According to the tender floated on December 26, 2025, "the bidder either jointly or any of the member of consortium shall have executed rock dredging works cumulatively over a period of 10 years, a quantity of minimum 8.12 million cum by deploying Cutter Suction Dredger, ending on the bid due date from the eligible projects. This quantum work shall be certified and paid by the Authority and to that extent a certificate or proof thereof shall be produced. In case the bidder does not meet the requirements of above (both work experience and financial position) himself, bidder may utilise the experience of their parent company provided that the bidder is subsidiary of the parent company (parent company that shall have the controlling stake more than 50 per cent in the subsidiary company) and the parent company provides an undertaking that they are jointly or severally responsible for successful performance of contract".

But on February 16, while responding to pre-bid queries, the port authority deleted this qualification criterion and introduced a different "specific requirement".

"The bidder or any of the members of consortium shall have executed/completed the construction of breakwater for a minimum length of 2 km over a period of five years ending on the bid due date from the single eligible project," the port authority wrote in the pre-bid response.

"This quantum work shall be certified and paid in India and to that extent a certificate or proof thereof shall be produced. In case the bidder does not meet the above requirements of work experience himself, the bidder may utilize the experience of their parent company provided that the bidder is subsidiary of the parent company (parent company that shall have the controlling stake more than 50 per cent in the subsidiary company) and the parent company provides an undertaking that they are jointly or severally responsible for successful performance of contract," the port authority added.

None of the global dredging companies would meet this qualification criteria.

In India, Adani Ports and Special Economic Zone Ltd and its group company Cemindia Projects Ltd, could potentially become the only company to qualify for the tender based on the experience of constructing a 2.96 km-long breakwater for Vizhinjam port in the last five years.

The VOC Port HAM project was tendered in December on the basis of the dredging guidelines framed by the Ministry of Ports, Shipping and Waterways which apportioned the experience criteria on the nature of dredging.

"VOC Port Authority was just following the dredging guidelines while issuing the tender. But following the rules all the time does not lead to success. Rules are made so that there is fairness. But following the rules in this case was becoming unfair for the government as multiple tenders failed resulting in huge cost escalations. The port authority knew that.

They had reached out to a lot of people to understand whether more entities would meet the qualification criteria but realized that there are only three-four companies in the world that may meet the criteria. And these three-four companies will dictate the pricing, with whom they will join and the fate of the project. Then the port authority became smarter and changed the qualification criteria to breakwater construction experience," the dredging industry source explained.

Now the scenario is that some local company who has got breakwater construction experience of two kilometres will bid and win the contract. This local company will be on a strong wicket and then these three-four foreign companies will have to come on the terms set by the local company for undertaking the dredging and reclamation part of the project as a sub-contractor. And, if an Indian company gets a dredging project of some ?6,000 crore, then it can buy a dredger of 3,600 kilowatts costing ?600-800 crore to execute the work," he continued.

As long as tenders are floated by incorporating the dredging guidelines, there would never come an Indian company in the next 100 years who will qualify for such projects, he stated.

"With the change in qualification criteria, these three-four foreign companies will not be the decision makers. The local company winning the tender on the strength of the breakwater construction experience can choose between these three-four foreign companies for a tie up. This will at least ensure that an Indian company gets the contract," he noted.

As a result, there will be an Indian company who would have executed 10 or 12 million cubic metres of rock dredging worth some ?6,000 crore and this could potentially help it qualify for such large dredging projects across the globe," the source said.

But, if the dredging guidelines were adopted for the tender, the work would be undertaken by a consortium, and the dredging experience would remain with the dredging partner in the consortium and not go to an Indian company. VOC Port Authority's strategy will ensure that a couple of Indian companies will gather the experience to undertake such large dredging projects in the country.

"I think, VOC Port Authority has finally found a solution for India," the source added.

To be sure, VOC Port Authority's game plan is yet to secure approvals from the Public-Private-Partnership Appraisal Committee, Cabinet and environmental and coastal regulation zone clearances.

Potential bidders have accused the port authority of keeping a qualification criterion (breakwater construction) that accounts for just 12 per cent of the total project cost by removing the dredging and reclamation experience (which has a 66.4 per cent share in the total project) and for reducing the international competitive bidding to a domestic competitive bidding.

According to the CVC guidelines, tenders of state-run firms valued above ?200 crore have to be finalised through international competitive bidding only.

Source: ET Infra. Com 

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