Recent Developments: Progress across the maritime chain

Progress across the maritime chain

August 2017

The past year was marked by key developments across the entire maritime chain – ports, shipping, shipbuilding, shipbreaking, coastal shipping and inland water transport (IWT). Progress was documented in the completion and award of key capacity augmentation projects, promotion of ease of doing business and environment-friendly modes of transport such as coastal shipping and IWT, the introduction of new technologies, among others. The government has been proactive and has announced various long-awaited measures which are expected to have a positive impact on the sector as a whole.

Indian Infrastructure provides a snapshot of key developments in the past year…

  • The past one year witnessed the introduction of important policy and regulatory measures. In December 2016, the Union cabinet approved the Ministry of Shipping’s (MoS) proposal to replace the Major Port Trusts Act, 1963, by the Major Port Authorities Bill, 2016. The new bill will grant the major ports full autonomy in decision-making and modernise their institutional structure. Earlier, in November 2016, the cabinet approved the introduction of the revamped Merchant Shipping Bill, 2016, and simultaneously repealed the Merchant Shipping Act, 1958, and the Coastal Vessels Act, 1838.
  • The MoS also proposed a new model concession agreement (MCA). The new agreement allows private players to exit port projects after six years and gives them the power to issue bonds to refinance debt. The new MCA, with 11 prominent changes, will replace the existing MCA that became effective in January 2008.
  • The new berthing policy for dry bulk cargo for all major ports came into effect on August 20, 2016. The policy aims to reduce berthing time and overall turnaround time of ships, standardise anchorage charges, etc. at major ports. Meanwhile, in July 2016, the MoS approved a policy for the award of waterfront and associated land to port-dependent industries at major ports.
  • To promote transshipment at Indian ports, the MoS allowed a relaxation in cabotage rules. Ports with container traffic less than 50 per cent of their total cargo can become transshipment hubs. This is applicable only to export-import or empty containers. Also, any new or existing port handling container transshipment traffic can apply for the relaxation to the Directorate General of Shipping.
  • With the aim of replacing archaic laws hindering efficient governance, the Lok Sabha passed the Admiralty (Jurisdiction and Settlement of Maritime Claims) Bill, 2016, in March 2017. The bill aims to establish a legal framework for consolidating the existing laws relating to admiralty jurisdiction of courts, admiralty proceedings on maritime claims, arrest of vessels and other related issues.
  • Giving a push to the implementation of the Sagarmala programme, the cabinet approved the incorporation of the Sagarmala Development Company on July 20, 2016.
  • Considerable capacity augmentation was witnessed during the past year. Capacity was added at Mundra port with the commencement of commercial operations of its fourth container terminal, the Adani CMA Mundra Terminal. The terminal has a capacity to handle 1.3 million twenty-foot equivalent units of cargo.
  • Construction work of the much-awaited Rs 75.25 billion Vizhinjam international container transshipment terminal was also initiated, with the Kerala government inaugurating the construction of the terminal’s first berth in May 2017. Kamarajar port commenced construction work on three coal berths entailing an investment of Rs 10 billion. Also, works commenced on the liquefied natural gas (LNG) import terminal at Dhamra port. The LNG terminal will have a capacity of 5 million tonnes per annum (mtpa) and is expected to be commissioned by 2020-21.
  • Foundation stones were laid for some important projects. These include the development of general cargo berth nos. 14 and 16 (other than liquid/container cargo) at Kandla port, at an investment of Rs 1,554.53 million and Rs 1,614.46 million respectively; eight port connectivity projects worth Rs 11.17 billion at the Jawaharlal Nehru Port Trust (JNPT); the fifth oil berth at Jawahar Dweep in Mumbai harbour involving an investment of Rs 8.11 billion, among others.
  • Connectivity has become a key focus area of the government. Indian Port Rail Corporation Limited has been incorporated as a special purpose vehicle to provide last-mile connectivity to ports. As of June 2017, construction work on 12 projects (75 km) worth Rs 6,650 million has already commenced. Detailed project reports have been finalised and the bidding process is under way for three projects (35 km) worth Rs 2,060 million, works are under planning and development for 10 projects (1,045 km) worth Rs 150 billion, rail connectivity to the non-major ports is under development with five projects (160 km) worth Rs 24 billion and the remaining nine projects involving rail overbridges/rail underbridges are being implemented under the Setu Bharatam programme at an investment of Rs 9 billion.
  • Meanwhile, one of the ambitious but long-delayed port connectivity projects of the National Highways Authority of India – the 20 km long Chennai port-Maduravoyal elevated road project – received approval from the MoS. Following this, in May 2017, the Tamil Nadu government approved its implementation. Construction work is scheduled to commence from December 2017 or early 2018.
  • The past year saw the award of some key dredging projects as well. JNPT awarded a Rs 19.63 billion contract for deepening and widening of the JNPT channel and the Mumbai harbour channel (Phase II) to the joint venture of Royal Boskalis Westminster N.V. and the Jan De Nul Group. The Kolkata Port Trust awarded a Rs 11.19 billion contract for maintenance dredging for a period of five years, commencing January 2017, to the Dredging Corporation of India. Meanwhile, Karaikal port awarded a Rs 150 million maintenance dredging contract to Mercator Limited. The Kandla Port Trust (KPT) has awarded the dredging contract for the approach channel for the next three years to Van Oord India Private Limited.
  • The sector witnessed some progress on promoting the ease of doing business and the use of technology. The radio frequency identification system has become fully operational at Paradip, Kamarajar, Cochin, JNPT and Mormugao ports and a trial run has been initiated at the Haldia Dock Complex. The direct port delivery (DPD) scheme launched to reduce dwell time and transaction costs at ports is gaining momentum. As of March 2017, about 28 per cent of the total import volumes at JNPT are being handled through DPD.
  • In May 2017, Delhi-Mumbai Industrial Corridor Development Corporation Logistics Data Services Limited launched the logistics data bank (LDB) project across the port terminals of Mundra and Hazira. The container terminals being covered are the Mundra International Container Terminal, the Adani Mundra Container Terminal (container terminal [CT]-2), Adani International Container Terminal (CT-3), Adani CMA Mundra Terminal (CT-4) and Adani Hazira Port Private Limited. JNPT was the first major port in the country to commence the LDB service, on July 1, 2016.
  • Several non-major ports have also deployed new technologies. In June 2017, Krishnapatnam Port Company Limited launched e-Xpressway for its container operations. Earlier, in January 2017, it installed the first baggage scanner system at the port. In February 2017, APM Terminals Pipavav implemented the electronic sub-manifest transshipment permit facility at its port for paper-free custom clearance.
  • Some developments also took place on the financial front. JNPT signed an agreement with the State Bank of India (SBI) and the Development Bank of Singapore (DBS) for external commercial borrowings (ECBs) worth $400 million ($300 million from SBI and $100 million from DBS) to improve its infrastructure. Further, KPT gave in-principle approval for the procurement of medium- to long-term ECBs in dollar denomination to fund various development projects.
  • On the shipping front too, some important developments were seen. The MoS along with the Ministry of Tourism announced reforms for the regulatory processes governing the cruise tourism industry. The key recommendations include a single-window system for all pre-cruise requirements for cruise operators such as the entry of vehicles, personnel and guides electronically, doing away with checking of registration and licence papers of vehicles each time and the creation of a dedicated approach road and entrance to the cruise terminal, among other things.
  • In November 2016, the Ministry of Environment, Forest and Climate Change issued environmental and coastal regulation zone clearances for the project being undertaken for the upgradation of the Alang-Sosiya ship recycling yards. The peoject is to be implemented with a loan from the Japan International Cooperation Agency.
  • Providing a major boost to the IWT segment, the Union cabinet approved the proposal jointly mooted by the MoS and the Ministry of Road Transport and Highways for the amendment of the Central Road Fund Act, 2000, to allocate 2.5 per cent of the proceeds of the Central Road Fund for the development and maintenance of national waterways and a reduction in the share provided for development of national highways.
  • Further, in June 2017, the Jal Marg Vikas project moved a step further, with the signing of the contract between the Inland Waterways Authority of India and ITD Cementation India Limited for a multimodal terminal at Haldia. The terminal is expected to handle 3.18 mtpa of cargo.