A consortium of Port of Singapore Authority (PSA) and India's ABG Ports, which had won the R6,700-crore contract to build the fourth terminal, has refused to pay R50 crore stamp duty to the state government and has demanded JNPT to bear it.
We were not informed in advance and not communicated clearly that we have to bear the stamp duty expenses, said a senior official at ABG Ports. The moment this issue gets sorted out, we will go ahead with the project as it is a prestigious one for us.
JNPT, which uses more than 95% of its capacity now, has lost 15% market share, tumbling down to 45% from 60% in 2008, as rivals Mundra Port and Special Economic Zone (MPSEZ) and Gujarat Pipavav Port wrest business. These new ports jointly have 8.4 million tonnes equivalent unit (TEU) capacity, double that of JNPT. The new ports capacity will double to 15 million TEUs by 2015, putting pressure on JNPTs revenues
Demand will always find an alternative, said Manish Saigal, partner at KPMG India, a global consultant. JNPT has already started losing on trade and would have done better had it had more capacity.
The fourth terminal at JNPT is critical as India will ferry more containers, as transport of more and more goods gets containerised.
India's container traffic volume at 9.7 million in 2011 is expected to grow every year by 11% to 14 million TEUs by 2015. Indian ports, which can handle 12.9 million standard containers, will more than double their capacity to 22.7 million TEUs in three years as they build fresh capacities. Port congestion is neither new in India nor specific to JNPT, as roughly all major ports are congested, say experts.
Although, it seems that supply-demand scenario is fairly balanced, in reality, ports which handle largest numbers of vessels and container traffic are suffering from serious congestions, said Abhishek Tandon, consultant and research manager, ports & containers, Drewry Shipping Consultants.
But the government has plans to ease traffic by building fresh ports. It is planning to award anywhere between 60% and 70% of its planned 23 ports this year under private-public partnership (PPP) model. But port officials say the model is yet to take off.
The PPP projects have not taken off because in a PPP model, typically ports share the profits but do not share the risks, said an official of a port operating a container terminal in Gujarat. The private partners are also given a step-motherly treatment.
JNPT's cup of woes are filling up. Company's plan to increase its draft to 14 metre from 11 to allow larger ships to use its port and raise tax-free bonds are yet to take off.
JNPT's dredging work is getting delayed, expansion of 330-metre berth seems to be taking time and uncertainty in Delhi-Mumbai Industrial Freight Corridor (DMIFC) coming up on time are a few of its major concerns, says Ganesh Radhakrishnan, adviser of PricewaterhouseCoopers India.