Making Headway: One-year progress report of the Sagarmala programme

One-year progress report of the Sagarmala programme

A year ago, on April 14, 2016, the central government released the National Perspective Plan (NPP) detailing the contours of Sagarmala, its flagship programme, intended to promote port-led development in the country. This is the first time that the government’s focus has shifted from port development to port-led development. The NPP has unveiled a number of projects to be implemented under the four pillars of Sagarmala to unlock the potential of India’s vast coastline of over 7,500 km.

Indian Infrastructure reviews the objectives, scope and progress made so far under the Sagarmala programme.

Programme background and objectives

Sagarmala, launched by the Government of India on July 31, 2015, aims to promote port-led development and provide infrastructure to transport goods to and from ports in a quick, efficient and cost-effective manner. The four main objectives of the programme are port modernisation and new port development, port connectivity enhancement, port-led industrial development, and coastal community development.

Subsequently, in April 2016, the NPP was released, under which a total of 415 projects have been identified to be implemented during 2015-35 across the four focus areas of Sagarmala. In September 2016, the Sagarmala Development Company was incorporated to aid in the execution of these projects.

Of the 415 projects, the Ministry of Shipping (MoS) has identified about 200 focus projects worth Rs 3.3 trillion which are targeted to be implemented under Sagarmala till 2025.

While the central and state governments are expected to provide almost three-fourths of the funding, the share of public-private partnership projects is also significant at 26 per cent. New sources of finance like dollar-denominated loans will need to be explored to meet the huge requirement. So far, two port operators, the Jawaharlal Nehru Port Trust (JNPT) and the Adani Group, have raised dollar-denominated loans to take advantage of the low borrowing cost, around 2.5 per cent as compared to 12-15 per cent, available in the domestic market. Meanwhile, ports can also partner with development banks to arrange funds for developing new ports and undertaking port connectivity and modernisation projects.

Progress so far

Port modernisation and new port development

Master plans for all the 12 major ports have been finalised. Based on these plans, 142 port capacity expansion projects involving an investment of Rs 914 billion have been identified for implementation till 2035. For operational efficiency improvement, a benchmarking exercise has been conducted for the ports. Overall, 116 efficiency-related initiatives have been identified for implementation over three years, of which over 70 initiatives have already been implemented, unlocking more than 80 million tonnes per annum of port capacity so far.

Based on a cargo traffic scenario study and port master plans, six potential new port locations – Sagar Island in West Bengal, Paradip Outer Harbour in Odisha, Sirkhazhi and Enayam in Tamil Nadu, Belikeri in Karnataka and Vadhavan in Maharashtra – have been identified. Techno-economic feasibility reports have been prepared for the new port locations.

Port connectivity enhancement

Under the port connectivity enhancement component of Sagarmala, 170 projects worth Rs 2.3 trillion have been identified. These projects aim to improve road, rail and inland waterway connectivity to major and non-major ports. Of these, the development of expressways with dedicated freight lanes will account for the highest share in the total investment at 55 per cent, followed by rail connectivity projects at 22 per cent.

As of February 2017, Indian Port Rail Corporation Limited has identified a total of 26 projects involving an investment of Rs 57 billion under the port connectivity component. Of these projects, construction work on 10 projects has started while for the remaining, detailed project reports (DPRs) have either been finalised or are under consideration/preparation. Meanwhile, 79 road connectivity projects, to be taken up by the Ministry of Road Transport and Highways, the National Highways Authority of India and ports, have been identified, including 18 projects under the Bharatmala scheme.

Further, the scope of the Coastal Berth Scheme (CBS) has been expanded and merged with the Sagarmala programme. Under this scheme, projects for the construction or upgradation of dedicated berths for coastal cargo and berths or jetties for passenger ferries, mechanisation of berths, construction of breakwaters, platforms and jetties, and capital dredging projects will be considered for assistance. Financial assistance of 50 per cent of the project cost will be provided to major ports/state governments for the construction of coastal berths and breakwater, mechanisation of coastal berths and capital dredging works. So far, funds amounting to Rs 1,520 million have been released for 16 projects under the CBS.

In addition, cabotage has been relaxed for a period of five years for specialised vessels like roll-on, roll-off (ro-ro) carriers, ro-ro passenger vessels, etc.

Port-linked industrialisation

Under Sagarmala, 14 coastal economic zones (CEZs) have been identified in Gujarat, Maharashtra, Andhra Pradesh, and in the land bank of the Salt Department of Ennore in Tamil Nadu. The request for proposal bids for the appointment of consultants for preparing the detailed master plans for CEZs and pilot coastal economic units (CEUs) have also been shared with the relevant stakeholders (including the Department of Industrial Policy and Promotion) for comments and inputs. Each of the CEZs will consist of multiple CEUs which will house industrial clusters/projects.

Based on a detailed origin-destination study of key commodities, a total of 29 potential industrial clusters have been identified across the energy, materials, manufacturing and maritime sectors. Draft master plans have been prepared for the proposed maritime clusters in Gujarat and Tamil Nadu and have been shared with the respective state governments for inputs.

Coastal community development

Till December 2016, the MoS had released

Rs 169 million for skilling projects covering over 20,000 people across 20 coastal districts. Of this, Rs 100 million has been released as the first instalment for a fire safety training project for workers at the Alang-Sosiya shipyard and the remaining Rs 69 million has been released as the first instalment for Phase I of a skill training project across 27 coastal districts being undertaken with the Deen Dayal Upadhyaya Grameen Kaushalya Yojana. The shipping ministry is undertaking a skill gap analysis study in 21 coastal districts across all maritime states. The action plan for six districts (first phase) has already been prepared. The ministry is also evaluating the proposal to set up a multi-skill development centre near JNPT and a centre of excellence for shipbuilding.

Fishing harbour projects under coastal community development will be funded by the MoS, the Department of Animal Husbandry, Dairying and Fisheries and the Ministry of Agriculture. In this regard, the Sassoon Dock modernisation project has been approved and the first instalment of Rs 65.2 million has been released. Moreover, in-principle approval has been obtained for the upgradation of fishing harbours at Veraval and Mangrol.

The way forward

The Sagarmala programme has a multi-pronged approach towards port-led development and is expected to revolutionise not only the maritime sector but the logistics sector as a whole. The development of new ports, CEZs and smart cities along with an improvement in road, railway, coastal shipping and inland waterway connectivity, and the use of online channels for the exchange of information will offer significant opportunities for construction players, consultants, dredging contractors and technology and equipment providers.

However, given the broad scope of the programme involving multiple stakeholders, effective coordination among them is essential. Enabling policies, robust institutional structures and appropriate financing and funding mechanisms will be critical for inclusive growth under the programme. Though Sagarmala is a welcome step, its timely and effective execution will be key in driving maritime sector growth.