During the past one year, the port sector witnessed some major developments. New policy measures related to stevedoring charges and relaxation of cabotage restrictions were announced. Some progress was also documented in project completion and awards as well as on the technological front. Many new coastal shipping services were also started during the year. However, on the financial front not much activity took place.
Key developments over the past year…
- The Ministry of Shipping (MoS) has prepared a draft bill The Central Port Authorities Act, 2016 to replace the Major Port Trust Act, 1963. The ministry has invited suggestions from various stakeholders on the draft bill. Meanwhile, the MoS has also formulated a new berthing policy for dry bulk cargo for all major ports which will come into effect from August 20, 2016.
- On the policy front, steps were taken at both the central and state level to promote sector growth. The MoS relaxed the cabotage law for special vessels such as hybrid roll-on, roll-off (ro-ro), ro-ro-cum-passenger pure car and truck carriers and liquefied natural gas (LNG) vessels. The relaxation is for a period of five years, commencing September 2, 2015. Subsequently, in March 2016, the government also relaxed cabotage restrictions for ports which transship at least 50 per cent of the container cargo handled by them.
- In a major development, the MoS launched the National Perspective Plan (NPP) under the Sagarmala programme in April 2016. The plan has been approved by the National Sagarmala Apex Committee. A total of 150 projects involving port modernisation, connectivity, port-led industralisation and coastal community development have been identified under the plan. These projects entail an investment of Rs 4,000 billion.
- To streamline the customs procedure, the Central Board of Excise and Customs introduced an integrated declaration system with effect from April 1, 2016, under which all the information required for import clearance by government agencies has been incorporated into an electronic format at a single point.
- The Maharashtra cabinet too passed a revised State Port Development Policy on January 25, 2016. The policy covering greenfield ports, jetties, coastal shipping, inland waterways, shipyards and coastal economic zones will be in force for the next five years.
- According to India Infrastructure Research, projects involving a capacity addition of at least 55 million tonnes (mt) were completed at Indian ports between April 2015 and June 2016. (see table)
- During the period April 2015 to June 2016, the sector also witnessed the award of Rs 157 billion worth of projects. Upon completion, these projects are expected to add capacity of over 110 mt. In 2016 alone, so far, projects worth about Rs 33 billion have been awarded. These include the award of the development, operation and maintenance contract for the container terminal at Berth No. 11 and 12 at Kandla port to International Cargo Terminals and Infrastructure Private Limited (Rs 1.59 billion, 22.8 mt), the mechanisation of Eastern Quay (EQ)-1 to EQ-3 berths at Paradip port to the consortium of JSW Infrastructure Limited and South West Port Limited (Rs 14.38 billion, 22.15 mt), the construction of a ro-ro-cum-general cargo berth at Kamarajar port to L&T Geostructure (Rs 1.15 billion, 0.2 million cars), the redevelopment of Berth Nos. 8 and 9, barge berths and the existing mechanical ore-handling plant at Mormugao port to Sterlite Ports Limited (Rs 10.85 billion, 19.22 mt), and the construction of a ro-ro terminal at the ferry wharf, Mumbai to Karagwal Construction Private Limited (Rs 0.35 billion).
- During the past year, the foundation stone was finally laid for two much-awaited projects. The foundation stone for the Vizhinjam International Container Transshipment Terminal was laid on December 5, 2015. The project, being executed by Adani Ports and Special Economic Zone Limited (APSEZL) involves the construction of a greenfield, deepwater port at Vizhinjam in Kerala, on a design-build-finance-operate-transfer (DBFOT) basis for a concession period of 40 years. The foundation stone for the fourth container terminal at the Jawaharlal Nehru Port Trust (JNPT) was laid on October 11, 2015. Construction of the Rs 79 billion project began eight years after it was actually announced. Meanwhile, on December 4, 2015, the Yogayatan Group commenced work on a mid-size, all-weather port in the Thane creek near Mankhurd in Maharashtra with an investment of Rs 2.5 billion.
- There was significant focus on port connectivity in the past year. A special purpose vehicle, Indian Port Rail Corporation Limited (IPRCL) was formed to provide last-mile connectivity to major ports. Recently in May 2016, IPRCL awarded three rail connectivity projects worth Rs 387.1 million under the Sagarmala programme. Of these, two connectivity projects have been awarded at Visakhapatnam port and one at Chennai port. Besides, a few other key port connectivity projects were also awarded. One of the biggest projects to be awarded was at JNPT – the widening of a 43.9 km length (comprising National Highway 4B, State Highway 54 and Amra Marg linkages) to six/eight lanes along with two-lane service roads. This project worth Rs 20.51 billion was awarded in October 2015. JNPT signed an agreement with DBS Bank and the State Bank of India on April 15, 2016 to raise a dollar-denominated loan of $400 million for the project.
- The financing scenario in the sector however remained muted during the year. No foreign direct investment and private equity deals took place in the ports sector during the period under consideration. In terms of external commercial borrowings (ECBs), only APSEZL raised funds ($869 million) through ECBs during April 2015-June 2016. Further, APSEZL raised Rs 5 billion through the issue of debentures on a private placement basis. Meanwhile, in September 2015, Essar Ports Limited received approval to raise up to $1 billion through securities from domestic and international markets for its expansion plans.
- The sector witnessed some progress on the technology front as well. Tuticorin CFS Association (TCFSA) and Kale Logistics Solutions Private Limited signed a memorandum of understanding (MoU) to deliver India’s first container digital exchange (CODEX). The CODEX service will automate container movement at V.O. Chidambaranar (VOC) port. Meanwhile, Mundra port inaugurated the new digitised port community system on February 1, 2016. The Mundra International Container Terminal (MICT) also installed technically advanced terminal operating systems – TOS ZODIAC. JNPT, Chennai port and the VOC Port Trust have also deployed radiological detection equipment (RDE) devices to check illegal transport of nuclear material at the port. Further, Visakhapatnam port completed the installation of a Rs 1.25 billion RDE system at the East Quay-7 berth.
- Many new shipping services were also launched during the year. Coastal shipping services between Bangladesh and India were launched from India’s Krishnapatnam port to Bangladesh’s Chittagong port, on March 22, 2016. Under the bilateral protocol on inland water transit signed between the two countries, vessels will be operated on river protocol routes between seven ports in India (Kolkata, Haldia, Paradip, Visakhapatnam, Kakinada, Krishnapatnam and Chennai) and Bangladesh. Haldia International Container Terminal also resumed container handling services for Nepal after nearly two decades. A number of feeder services were also initiated during the period – Sima Marine India Private Limited launched coastal container shipping services in India covering four ports (Cochin, Mundra, Goa and Mangalore) Maersk Line and Far Shipping (Singapore) Pte Limited launched a feeder service from the Kakinada Container Terminal to Colombo, Sri Lanka.