Connectivity Challenge: Dedicated institution formed to address evacuation problems

Dedicated institution formed to address evacuation problems

Evacuation is one of the biggest challenges faced by Indian ports today. While major ports typically have double-line connectivity, the routes to major destinations are congested. For non-major ports, some such as Pipavav, Dahej, Mundra, Dhamra and Krishnapatnam have adequate first-mile capacity, but for last-mile connectivity, non-major ports have the same problems as major ports.

Though the major ports and Indian Railways have taken up several connectivity projects, there is an urgent need for focused attention and substantial resource allocation for this aspect of port development. At present, there is a lack of communication between railway and port authorities, which has led to delays in the evacuation of cargo and has affected the efficiency of major ports. Further, rail-port connectivity projects have faced issues such as those related to land acquisition, shortage of funds, high capital costs, along with slow and cumbersome approval processes. Further, at most major ports, adequate rakes are not available, leading to delays in the evacuation of cargo. Thus, setting up a special dedicated corporation for implementing rail connectivity projects was the need of the hour.

To meet this requirement, the Ministry of Shipping formed a special purpose vehicle (SPV), Indian Port Rail Corporation Limited (IPRCL), in March 2015. The corporation is a joint venture (JV) between 11 major ports (excluding Cochin port) under the Ministry of Shipping and Rail Vikas Nigam Limited (RVNL) as equity shareholders under the Companies Act, 2013, set up as a public limited company. IPRCL has an initial authorised capital of Rs 5 billion and an initial subscribed share capital of Rs 1 billion.

The objectives of the SPV are to provide efficient rail evacuation systems and undertake projects involving last-mile connectivity to major ports. It is responsible for the modernisation of evacuation infrastructure, operations and management of internal port railway systems and raising financial resources for funding port-related connectivity projects. IPRCL will also assess intermodal gaps in handling rail cargo by major ports and develop suitable solutions to enable the seamless flow of cargo. It will also strengthen the implementation of the Sagarmala programme’s second pillar of improving port connectivity by undertaking dedicated port connectivity projects.

Progress so far

In December 2012, the Ministry of Railways framed a policy, Participative Models in Rail Connectivity and Capacity Augmentation Projects. For port connectivity projects, developers seem to prefer the non-government railway (NGR) or JV models. A number of ports such as Mundra, Dhamra, Astaranga and Tuna are operating under the NGR model. Several SPVs are also operating or have projects under construction under the JV model. Some of these are Pipavav Railway Corporation Limited (2002), the Hassan-Mangalore Rail Development Company (2009), the Kutch Railway Company (2006) and Bharuch Dahej Railway Company Limited (2011). Besides, other rail connectivity projects such as Haridaspur-Paradip and Angul-Sukinda will also be undertaken as JV projects.

In addition, the Ministry of Road Transport and Highways has launched the Setu Bharatam programme, which aims to make all national highways free of railway level crossings. IPRCL has been tasked with undertaking 22 projects.

One of the biggest projects to be undertaken by IPRCL is the dedicated rail freight corridor connecting the coalfields of Ib Valley-Talcher with Paradip and Dhamra ports for the evacuation of thermal coal and for the movement of imported coal to the thermal power stations in the area. The corridor will serve industrial clusters along the route by way of movement of imported coking and thermal coal and other raw materials.

The project will give a major impetus to the government’s initiative of promoting multimodal logistics and coastal shipping. IPRCL is also willing to take up projects for non-major ports if they are viable. In the second meeting of the inter-ministerial committee, it was decided to examine the feasibility of developing a heavy-haul corridor beyond Salegaon up to Paradip port avoiding the Cuttack area along the existing Cuttack-Paradip double line.

Going forward, IPRCL will be a consultant for all ports and suggest best practices in areas such as asset utilisation/allocation, agreements with railways/third parties/private operators, etc. It can also borrow funds from the market by leveraging the available equity and use these funds for financing major projects.

To conclude, the dedicated port rail corporation will help fast-track port connectivity projects, which, in turn will help increase the percentage of cargo being evacuated via rail from major ports.

Based on a presentation by Anoop Agrawal, Managing Director, IPRCL, at a recent India Infrastructure conference