On a rocky shore

Written by Vaishnavi Bala | Updated: Feb 19 2014, 08:05am hrs
Even as the Cabinet Committee on Economic Affairs (CCEA) recently approved five port projects worth R17,630 crore to augment Indias port capacity, the shipping ministry may again fall short of its target of awarding projects worth R25,000 crore during FY14.

During FY13, the shipping ministry awarded 13 PPP (public-private partnership) projects at a total cost of R6,603 crore, which was only 20% of what the ministry had targeted for the financial year. Till December FY14, the government had awarded projects worth R6,000 crore. In addition, the government awarded Ennore Ports R1,270-crore container loading facility to Adani Ports and Special Economic Zone last week.

About 150 million metric tonnes of capacity will be created in the next three months. Jawaharlal Nehru Port Trusts (JNPT) upcoming fourth container terminal will contribute 64 million metric tonnes to this, according to Vishwapati Trivedi, secretary, ministry of shipping.

The CCEA approval includes four container terminals in major ports of Kandla, JNPT, Kolkata and Ennore. Apart from these four container terminal projects, the CCEA also approved a multi-cargo berth at Mumbai Port Trust.

JNPTs R8,000-crore fourth container terminal project is currently under the bidding process. The big-ticket project, which has been in limbo for three years, is crucial to JNPTs expansion plans as it is expected to double the ports capacity.

Chennai Ports R4,000-crore mega container terminal project and Kolkata Ports R1,700-crore Haldia Dock 2 project are among the other big port projects that have been stalled.

One has to first understand that other than the PPP model, there is no other way we can capture the high capacity deficit that currently exists in this sector. Earlier there were issues related to fixing the tariffs for major ports by the Tariff Authority for Major Ports. But now the government has eased the norms for fixing tariff for new projects, which makes it more attractive for private players to bid for government projects, said NN Kumar, chairman-in-charge at JNPT.

These five projects will double the container handling capacity, which is at 11.57 million twenty-foot equivalent units (TEUs). TEU is a unit of cargo capacity often used to describe the capacity of container ships and container terminals.

The multipurpose cargo berth proposed for the Mumbai Port Trust will entail a capacity addition of 4.5 MTPA and will benefit industries located in the hinterland. This facility will be equipped to handle iron and steel project cargo and automobiles.

Many projects have been stalled in the past few years and the flow of private investments has been slow. More importantly, the government needs to create a better climate for private investments in Indian ports, says Anand Sharma, director of Mantrana Advisory.