Progress Hindered: Greenfield port projects facing land acquisition and environmental clearance issues

Greenfield port projects facing land acquisition and environmental clearance issues

Of the total cargo traffic handled at Indian ports in 2015-16, non-major ports accounted for a share of 43 per cent as compared to 24 per cent in 2000-01. This increase was primarily led by the growth in private ports, with maritime states accelerating their efforts to develop these ports, largely through private participation.

According to India Infrastructure Research, 14 non-major ports involving an investment of more than Rs 428 billion have been planned. Upon completion, these projects are expected to add over 465 million tonnes (mt) of capacity. With regard to the type of public-private partnership format, build-own-operate-transfer (BOOT) is the most preferred. Of the 14 non-major ports, five are at a preliminary/planning stage, three projects have been awarded, and construction work has commenced on six port projects.

However, the implementation of new non-major ports has been quite slow due to a host of problems at the bidding, pre-construction and post-completion stages, before commencement of commercial operations. The notable problems are delays in land acquisition and obtaining statutory clearances (coastal regulation zone [CRZ], forest, pollution and environmental).

Indian Infrastructure provides an update on the key projects…

  •  Astaranga port, Odisha: The port is being developed by Navayuga Engineering Company Limited (NECL). The terms of reference (ToR) for the development of the port were granted on January 28, 2016 and the land acquisition process is in progress. NECL has so far been given a total of Rs 14.82 million towards the establishment cost for land acquisition for the proposed port.
  • Azhikkal port, Kerala: Proposed to be developed in two phases, the port involves the development of a multi-purpose terminal with a capacity of 1.8 mt and a cement terminal of 2.25 mt capacity. While the Kerala government is planning to invite fresh tenders for the cement terminal, dredging works to deepen the channel and basin draught up to 6 metres is expected to begin soon.
  • Beypore port, Kerala: Being developed by Infrastructures Kerala Limited, the scope of work involves the construction of a dedicated berth for handling cargo and passenger vessels to and from Lakshadweep, and other infrastructural facilities. The port needs only 3.83 acres of additional land. The rest of the land is owned by the state government and will be given on lease to the Lakshadweep Development Council for a period of 30 years. The project has been moving at a slow pace due to the delays in land acquisition. Meanwhile, the tender process for the project is expected to be initiated once the environmental clearance has been received.
  • Bhavanapadu port, Andhra Pradesh: The ToR, granted by the Ministry of Environment, Forest and Climate Change (MoEFCC) in May 2016, mentioned that various studies need to be submitted to the MoEFCC as part of the process to accord the environmental clearance for the project. As of March 2017, the Andhra Pradesh government is expected to hold negotiations with the Adani Group, the lone bidder, as the company has offered to give only 0.5 per cent of the revenues from the project in case it wins the port project.
  • Chudamani port, Odisha: The CRZ and environmental clearances for port development were received on June 3, 2009, following which an MoU was signed in October 2009 with the Aditya Birla Group. Presently, construction work on the port is in progress.
  • Dahej port, Gujarat: Sterling Port Limited, promoted by the Sandesara Group, signed an MoU for project implementation with the Gujarat Maritime Board (GMB) in June 2015. Construction work on the port is in progress. Reportedly, SREI Infrastructure Finance Limited plans to acquire the Sandesara Group’s stake in the port as an attempt to recover its loan. Reportedly, SREI has invoked a clause in GMB’s subconcession agreement with Sterling Port, wherein a lender has the right to approach the regulator with a request to replace the port operator by another developer. The Sandesara Group holds around 74 per cent equity in the project, with the remaining stake held by Sterling Biotech Limited.
  • Nargol port, Gujarat: Cargo Motors Private Limited is developing the port in phases. Phase I involves the construction of a coal berth and two container/break bulk berths while Phase IA involves the construction of a coal berth, a container berth and a multi-purpose berth. Construction work on Phase I commenced in October 2016 and is scheduled to be completed by April 2019.
  • Ponnani port, Kerala: The port contract was awarded to Malabar Ports Private Limited in January 2011 and the environmental clearance was received in June 2013. Reclamation works commenced in 2015 and are scheduled to be completed by December 2018. However, reportedly, work has come to a halt though the reasons have not been stated.
  • Subarnarekha port, Odisha: The port requires a total of 692.68 acres of land. Reportedly, Creative Port Development Private Limited (CPDPL), the project developer, had already given Rs 10 million as the incidental charge for the alienation of the land. In January 2017, Tata Steel executed a shareholder agreement to acquire a 51 per cent stake in CPDPL. The acquisition is subject to certain conditions, detailed technical assessments and financial closure.
  • Tadadi port, Karnataka: The project is being implemented by the Karnataka State Industrial Investment and Development Corporation. A special purpose vehicle (SPV), Tadadi Port Limited, has been incorporated for project execution. The MoEFCC’s expert appraisal committee gave the go-ahead to the project in December 2016. Following this, in January 2017, an expert panel of the MoEFCC recommended environmental and CRZ clearances with 27 specific conditions in addition to the regular conditions to ensure environmental protection.
  • Vijaydurg port, Maharashtra: A consortium of Privilege Hi-tech Infrastructure Limited (63 per cent stake), HIPE Transport Infrastructure Ventures Private Limited (26 per cent stake) and the Maharashtra Maritime Board (11 per cent stake) has incorporated an SPV – Vijaydurg Ports Private Limited – to execute the project. The concession agreement for the project was signed in March 2008 and the ToR was granted on April 28, 2015. Meanwhile, the proposed Kolhapur-Vaibhavwadi railway line is likely to be extended to the port.
  • Vizhinjam port, Kerala: The port is being developed by Adani Ports and Special Economic Zone Limited. Work on the port is progressing well and pre-construction activities like onshore/offshore soil investigation, and the construction of a temporary approach road, site office, etc. has been completed. Also, a 540 metre breakwater out of 3,100 metres, 15 hectares of land reclamation of 53 hectares and 34 per cent of the dredging works stand completed.
  • Yogayatan port, Maharashtra: The port is situated at Thane creek near Mankhurd in Maharashtra. The foundation stone for the port was laid on December 4, 2015. The project developer, the Yogayatan Group, has received all the necessary permissions to start the construction work.

Overall, the progress of greenfield port projects has been slow, with very few of them moving from the proposal/preliminary stage to the implementation stage owing to a number of issues. There is a need to fast-track the process of granting environmental clearances as well as clearing land acquisition proposals for faster project execution. The central and state governments’ role in addressing these issues is a key factor and will determine the future pace of project development.