MUMBAI: In what could be a major boost for shipping sector, the Defence Ministry is awarding projects worth Rs 50,000 crore to Shipping Ministry, which would rope in private players for some pojects through Cochin Shipyard.
"We are signing an MoU with the Ministry of Shipping to ensure that the orders which are there with the Defence Ministry could be shared comfortably with the private shipyards through Ministry of Shipping," Defence Minister Manohar Parrikar said on the sidelines of maiden Maritime Summit here.
Later, Road Transport, Highways and Shipping Minister Nitin Gadkari said order from the Defence Ministry could be in the range of about Rs 50,000 crore.
"We have discussed that Defence Ministry will provide Rs 50,000 crore work order to Cochin Shipyard. Cochin Shipyard in turn will award some of the projects to private sector," Gadkari told PTI.
The Shipping Ministry is collecting all orders from Government of India which includes order for nine LNG ships worth Rs 18,000 crore and private sector will be roped in for the some of these.
He said private shipping players were passing through a difficult phase and the orders would provide some relief to them. Government had held a meeting of the bankers and shipping players to solve their problems, Gadkari said.
Earlier, Parrikar said private sector would be roped in through the Ministry of Shipping as Defence has several criteria which are hard to meet by private players.
"There is another government department which can act as cushion. We can order allotment of some order to private shipyard. With shipping ministry it would be another government department. We can work out some orders or some work that can be given to private ship yards through ministry of shipping and this is what MoU is," Parrikar said.
"This is an experiment being done so let us start somewhere. The minister(Gadkari) is very positive, I am ready to provide support. So let us start with something," he added.
Replying to question on how the private sector will meet quality issues, Parrikar said, "You are asking me how the dish will taste. ... I'm just reading the recipe and we are drafting the recipe and going to cook.
"Let me make an experiment which I and Gadkari both intend to make successful and we will definitely make it successful. When you make an experiment you can predict the outcome. We hope the outcome will be very positive."
On quality issues Gadkari said it will be the responsibility of Cochin Shipyard.
Earlier in a session, Gadkari said that the condition of 27 private sector shipyards is very poor and government is holding meetings with them to solve their issues.
Cochin Shipyard recently announced to build cryogenic carriers that transport natural gas frozen in liquid form. It has signed a pact with GTT France, the world leader in design and technology provider of containment systems for transportation of LNG.
Cochin Shipyard, incorporated in 1972, can build and repair the largest vessels in India. It can build ships up to 1,10,000 DWT and repair ships up to 1,25,000 DWT. The yard has delivered two of India's largest double hull Aframax tankers each of 95,000 DWT.
Replying to a question, Parrikar said that the Ministry of Defence is also considering offloading the repair of warships to private shipyards as part of the pact with Ministry of Shipping.
He said his ministry has already included many private shipbuilders in the production of war ships. Due to financial constrains certain private ship yards are unable to deliver these orders in time.
In order to enhance participation of private sector in warship building, MoD has to partner with Ministry of Shipping, he said.
He also said that the aim of the MoU would be to improve the financial situation of private shipyards.