Future Opportunities

Top projects in ports

India Infrastructure Research tracked 70 projects in the Indian port sector, involving a combined investment of over Rs 1.4 trillion. Of these, seven projects worth Rs 25 billion have been completed, 18 (Rs 349 billion) are under construction, 20 have been awarded (Rs 463 billion) but work is yet to start, and 25 (Rs 578 billion), which have been announced but not yet awarded.

Completed projects

Six projects worth at least Rs 23.24 billion were completed between January 2014 and January 2016 at major ports, adding 35.42 million tonnes (mt) of capacity. Four projects worth Rs 20 billion were undertaken on a public-private partnership (PPP) basis.

Two of the biggest projects in terms of cost were commissioned at Kandla and Mormugao ports, both by Adani Ports and Special Economic Zone Limited (APSEZL). The company spent Rs 10.6 billion on a dry bulk terminal at Tuna Tekra, Kandla, with a capacity of 14.11 mt. This was commissioned on schedule in February 2015. The second project completed by APSEZL was a Rs 4.06 billion coal handling terminal at Berth No. 7 of Mormugao port. This terminal can handle 4.61 mt of coal at a 300 metre long berth.

At the state level, greenfield port development is subdued with no facility commissioned in the period under consideration. Among existing non-major ports, the container terminal at Kakinada port has started handling vessels. The terminal was built by PSA Singapore and the Bothra Group at a cost of Rs 1.32 billion.

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Under-construction projects

Among the projects tracked, 20 projects entailing an investment of Rs 349 billion are under implementation. Overall, these projects are expected to create about 393 mt of capacity. Most of these projects are expected to be commissioned by 2017. Of these 20 projects, 13 are being implemented in the PPP mode, while five are being implemented on a non-PPP model.

The biggest greenfield project curently under construction is Vizhinjam port involving an investment of Rs 75.25 billion. The project was awarded to the sole bidder, APSEZL, on June 10, 2015. This was the fourth attempt to award tenders for the project. The project faced inordinate delays due to several reasons, such as delays in security clearances, legal issues, and changes in its development model. In February 2015, the Ministry of Finance granted approval for viability gap funding of Rs 16.35 billion for the project, marking the first time such funding was granted for an Indian port project.

At the existing non-major ports, two big-ticket projects under construction are both at the APSEZL-operated Mundra port. The first project is the development of the fourth container terminal with a capacity of 1.3 million twenty-foot equivalent units, while the second project involves the development of a liquefied natural gas (LNG) terminal worth Rs 45 billion. Both projects are expected to be commissioned by end-2016.

At major ports, there are 12 port projects with a capacity of 163 mt under construction. The biggest of these is the fourth container terminal at the Jawaharlal Nehru Port Trust (JNPT). Construction has finally begun, eight years after the project was announced. The Rs 79.15 billion project envisages a capacity addition of 60 mt in two phases.

Another major project under construction is the container terminal at Kamarajar port. The project was initially awarded to a consortium led by Group Maritim TCB in 2010. However, the consortium had to withdraw from the project as it failed to tie up funds within the stipulated deadline. The port then reinvited bids for project implementation, and issued a letter of award to APSEZL on February 18, 2014.

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Projects awarded but work not yet started

Between January 2014 and January 2016, 10 projects worth Rs 102.94 billion were awarded at major ports. Once completed, these will add a capacity of 74.90 mt. The biggest project in this category at the major ports is the Rs 35 billion floating storage and re-gasification unit (FSRU) LNG terminal at Kolkata port.

At the state level, no agreements for greenfield ports were signed between January 2014 and January 2016. However, some big awards from five-six years ago (Machilipatnam, Kirtania and Astaranga ports) witnessed significant delays due to issues in land acquisition, obtaining environmental clearances, etc. These projects are yet to commence construction works.

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For the Rs 23.45 billion Kirtania port project, the transfer of land to the port promoter has been stalled as of August 2015, as per orders of the Odisha High Court. The concession agreement for the project was signed in November 2008. Meanwhile, the Rs 74.17 billion Astaranga port project, for which the concession agreement was signed in 2010, is facing delays due to issues in receiving environmental clearance and land acquisition.

Another big project that is yet to start construction is Machilipatnam port in Andhra Pradesh. The project, involving investments of Rs 16 billion, has faced considerable delays due to land acquisition. The concession agreement was signed in 2010. In September 2015, the state government gave an extension of 36 months to Navayuga Engineering Company Limited for project execution. The state government also decided to facilitate the acquisition of the remaining 300 acres of land of the total 5,327 acres required for the project. On December 19, 2015, the state cabinet approved the proposal for setting up the Machilipatnam Area Development Authority (MADA) under the Andhra Pradesh Metropolitan Region and Urban Development Authorities Bill, 2015 for enabling land acquisition for the project.

Projects announced

Around 25 projects worth Rs 577 billion have been announced. Once completed, these will add about 296 mt capacity at Indian ports. Of these, 13 projects are at the bidding stage, while the rest are at the preliminary/planning stage. With regard to ownership, 19 projects are to be implemented in PPP mode, while two projects will be undertaken on a non-PPP basis.

Among major ports, projects worth Rs 135 billion are at the bidding stage, and are targeted to be awarded in the next one year. The biggest project under bidding is the container terminal at Tuna Tekra, Kandla, involving an investment of Rs 30.97 billion and capacity addition of 27 mt. The last date for submission of request for qualification (RfQ) bids was June 29, 2015. No further update on the project is available. Another big project at the bidding stage is the Rs 27.4 billion floating FSRU LNG terminal at Mumbai. The port has shortlisted three bidders and the final request for proposal (RfP) is to be issued soon.

The deadlines of some of these projects under bidding have been extended several times due to the poor response. For example, the date for submission of RfQ bids for redevelopment of Berths 8 and 9 and barge berths at Mormugao port was extended twice and later, the port reinvited RfQ bids, for the project. The port has now shortlisted three companies and has invited RfP bids with March 4, 2016 as the last date for submitting the bids. At JNPT, the additional liquid bulk terminal project involving a capacity addition of 15.84 million tonnes per annum was approved in 2014. In September 2014, JNPT shortlisted six companies; however, the bidding process was scrapped. The bids were reinvited in September 2015, and this date was further extended three times. In addition, the Ministry of Shipping now plans to develop new ports at Sagar Island in West Bengal, Wadhwan in Maharashtra and Colachel in Tamil Nadu. These are expected to involve investments of at least Rs 386 billion.

At the state level, six new ports are at the preliminary/planning stage. One of the biggest projects in the pipeline in terms of cost is Tadadi port in Karnataka. The project involves an investment of Rs 38 billion to create capacities of 62.36 mt.

Conclusion

According to India Infrastructure Research, the port sector offers a pipeline of 63 projects that are either under implementation or are to be taken up in the future. These projects will entail investments of over Rs 1.38 trillion. Overall, the projects in the pipeline are expected to create 1,069.4 mt of additional capacity providing opportunities for developers, contractors, equipment providers, consultants and material providers.

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