Why You Should Care About the Dredging Corporation of India Being Privatised

Did you know that the Dredging Corporation of India (DCI) — vital to the country’s maritime trade and even helping to maintain security of the Indian Navy operations along the 7,517 km-coastline — is ranked 5th in the world among dredging companies?

And did you know that on 1 November, the Union Cabinet — during a meeting chaired by Prime Minister Narendra Modi — approved the sale of the central government’s entire 73.47% stake in this consistently profit-making Public Sector Undertaking (PSU) to private businesses?

In fact, unconfirmed reports suggest that among the interested buying parties might be a company owned by one of the sons of Union minister for shipping Nitin Gadkari.

Employees of the Dredging Corporation of India Limited (DCIL) have been protesting against this decision — under the umbrellas of the DCI Non-Executive Employees Union and Officers Association.

Workers were on a relay hunger strike in Visakhapatnam since 30 November.

On 4 December, a 29-year-old man named N Venkatesh — an employee of DCIL at its Visakhapatnam headquarters and lone bread winner for his parents and two sisters — committed suicide in protest against the Modi government’s decision to privatise the company, according to his suicide note.

A subsequent three-day strike by employees in Visakhapatnam and in project offices at major ports across the country — including Mumbai, Chennai, Cochin, Kolkata, Haldia and Paradip — ended on 22 December. The employees have threatened an indefinite strike.

The Water Transport Workers Federation of India had also written to the Prime Minister and the Union Minister for Shipping in November to not sell off the DCIL.

Members of Parliament (MPs) from Andhra Pradesh’s the ruling Telugu Desam Party and the opposition YSR Congress, as well as from Left parties, have objected in Parliament to the disinvestment of DCIL.

Ever since DCIL was set up in 1976 with an investment of Rs 28 crore, the company has never incurred losses.

In fact, DCIL has maintained its stellar performance despite the “shabby treatment” given to it by the government — as noted by the 170th Report of the Parliamentary Standing Committee (PSC) on Modernisation of Major Ports in 2011. The report also noted that the government had curtailed the autonomy of DCI.

The report also flagged that “huge funds are outstanding due to DCI from various agencies and as a result of which the DCI has not been able to take up development activities.”

The stalled Sethusamudram Shipping Canal Project is a case in point.

Meant to create a shipping route in the Palk Strait between India and Sri Lanka so as to reduce the travel time for ships traversing between India’s east coast and west coast, the project began in 2005. But it was abandoned in 2009 due to controversy created around the mythic Ram Setu by the RSS and the BJP.

DCIL has still not been paid for the dredging work it did on the Sethusamudram project, even as the estimation of how much money was due dwindled down the years.

As per a news report in 2013, the Sethusamudram Corporation owed the company Rs 426.41 crore for the dredging work it had done.

However, the DCI had originally estimated around Rs 578 crore that Sethusamudram Corporation owed the dredging company, said Padmanabha Raju, honorary president of the DCI Non-Executive Employees Union (CITU).

“The Sethusamudram Corporation later agreed on the outstanding amount of Rs 406 crore,” Raju told Newsclick.

“Then in 2014, a high-powered committee set up by the government in its report decided that the DCI was owed Rs 309 crore by Sethusamudram.”

In 2016, however, the Union government settled on the amount of Rs 167 crore to be paid to the DCIL, said Raju.

Despite such shabby treatment, the DCIL currently has work orders worth Rs 1855.5 crore in hand.

These include work orders from foreign shores as well, those of Bangladesh and Bahrain.

As for the private dredging companies, the Parliamentary Standing Committee report also pointed out how unreliable profit-seeking private companies are.

“The Committee is of the view that we cannot rely solely on the private dredging company. The Committee in this context would like to invite the attention of the Government to the recent media report wherein it has been stated that the private company engaged by the Cochin Port Trust for dredging failed to fulfil its obligations and the matter finally was taken to the court,” the report said.

The Committee was referring to the Vallarpadam International Container Transshipment Terminal project at the Cochin Port, commissioned in 2011, where private companies abandoned the capital dredging work midway.

It was thanks to the DCIL that the dredging work on the project was completed. What’s more, a nautical depth concept study conducted by DCIL helped the Cochin Port reduce its annual dredging costs by 25%.

It is clear that private parties ought not to be entrusted with the activities of the DCIL — which include maintaining national maritime and navigational facilities of waterways (including all major and minor ports) and providing dredging services to the Indian Navy, strategic activities that can possibly compromise national security.

In fact, it has been globally recognised that dredging companies should preferably remain in the public sector and be subsidised — given the experience of some countries that privatised their dredging operations and are now facing cartelised markets. Cartels refer to an association of manufacturers or suppliers for the purpose of maintaining high prices.

But what should have us all worried is that privatisation of DCIL is likely to raise prices of all products that are shipped over water.

Water transport — coastal shipping and inland waterways — are the cheapest mode of transportation for cargo.

Raju pointed out, “For example, the BJP-led NDA government is working on the Sagarmala Project to massively promote transport of goods through coastal shipping and waterways. If private players take over the dredging work, the costs will increase and they will make huge profits. This will increase the overall cost of water transport. As a result, the prices of the products that are shipped are bound to go up.”

Already, as noted by the Parliamentary Standing Committee in 2011, the government has been allowing private companies to intrude into the DCI’s market.

“It seems some sort of anarchic decisions are being taken with the vested interests in the Government to make DCI a sick unit which resulted in taking over of the dredging work by the private companies at exorbitant rates,” the report said.

“Let there be level playing field and no private company should be favoured at the cost of DCI.”

The Modi government has estimated that DCIL’s sale would fetch around Rs 1,400 – Rs 1,500 crore to the exchequer.

However, this is a severe undervaluation as the market value of the company’s assets is estimated to be around Rs 6,000 crore, according to the DCI Non-Executive Employees Union.

Reportedly, the government plans to raise Rs72,500 crore through disinvestment in Central Public Sector Enterprises in 2017-18.

Is selling off national assets the best way to raise money for the exchequer?

Did you know that the Modi government in its three and a half years of rule has already sold off national assets worth Rs.1.25 lakh crore to private hands? This privatisation spree has already extended to critical, strategic sectors such as defence production.

The BJP’s fast-tracked pandering to the neoliberal agenda stands out, when we compare it to the previous Congress-led UPA government — which despite being the pioneers of neoliberal loot in the country — had sold off public assets worth Rs 1.14 lakh crore in a decade of its rule.

In a 2012 Action Taken Report on the 177th Report on Ministry of Shipping, the Parliamentary Standing Committee had observed:

“It would hasten to add that DCI needs to be empowered/supported in a big way and its pending payments etc. should be settled. In the face of PPP in capital dredging, it should not be allowed to be closed eventually.........wishes to express serious apprehensions about the future of DCI in the emerging scenario”

The report was prophetic, but clearly the Modi government does not care.