Bullish on inland waterways, CSL plans JV with Hooghly Dock to tap segment

CSL is also planning to create a new vertical, leveraging its strengths as the leading shipbuilder and ship repairer in India

In order to create space in the inland water transport (IWT) sector, Cochin Shipyard Ltd (CSL), which recently went public, is planning to form a joint venture (JV) with Hooghly Dock and Port Engineers to take over the facilities in Salkia and Nazirgunge.

While CSL's chairman and management did not respond to Business Standard's query, the company's annual report showed that it is of the view that the IWT sector holds enormous potential. It is also planning to create a new vertical, leveraging its strengths as the leading shipbuilder and ship repairer in India.

However, the IWT sector is a very different space, which calls for different skill sets, capabilities and commercial approach. Further, this segment is best addressed through entities that are solely dedicated to the IWT space.

"We are at the final stages of the formation of the JV company at Hooghly to enter into this new segment of constructing smaller vessels for inland waterways and coastal shipping. A memorandum of understanding that was signed between CSL and Engineers India Limited last year will enable CSL to enter into small LNG segments too," said the company.

The government has announced major initiatives in the IWT sector with 101 new inland waterways being declared as national waterways. This, coupled with major initiatives under the Sagarmala project, has the potential to shift a major part of transportation to the waterways in the future.

As part of the Jal Marg Vikas programme, the Inland Waterways Authority of India is developing 1,398 km of the NW1 from Varanasi to Haldia (Kolkata) by creating multi-model terminals at Varanasi, Gazipur, Barh, Shahibganj, and Haldia, among other places, with rail and road connectivity. The initiative also includes a critical lock at Farakka, undertaking requisite dredging to provide least available depth (LAD) of 2.5 M in the upstream segments (much more is available downstream), navigational aids, and fuelling stations, among other things.

Two ship repairing units, one near Patna and the other one at Haldia, are being proposed. The Jal Marg Vikas project is being funded by the World Bank, which is investing $800 million. An amount of Rs 5,369 crore and contracts for many of the terminals and locks have already been awarded.

It is expected that inland water traffic will increase from 3.5 million metric tonnes (MT) to 11.5 million MT in the first phase of development. Under this phase, it is estimated that there would be a requirement of 123 ships. In the subsequent phases, another 200 ships are estimated to be required and traffic is estimated to go up to 22 million MT and later up to 45 million MT.