Expansion Plans: Key projects in the port sector

Key projects in the port sector

India Infrastructure Research tracked 87 projects (entailing an investment of more than Rs 5 billion each) in the Indian port sector, involving a combined investment of over Rs 3 trillion. Of these, three projects (Rs 68.34 billion) have been completed, 30 (Rs 716.97 billion) are under construction, 11 (Rs 215.63 billion) have been awarded but work is yet to start, and 43 (Rs 1,974.47 billion) have been announced but not yet awarded.

Completed projects

The three projects which have been completed in the past two years were implemented on a public-private partnership (PPP) basis. Construction work on Phase I of the Jawaharlal Nehru Port Trust’s (JNPT) fourth container terminal – Bharat Mumbai Container Terminal – was completed in January 2018, following which a provisional completion certificate was issued to Bharat Mumbai Container Terminals Private Limited. Developed at an investment of Rs 47,190 million, facilities under Phase I of the project include a 1,000 metre quay with five approach trestles, a storage facility comprising 9,336 ground slots with rail/road connectivity, state-of-the-art container handling equipment (comprising 12 quay cranes, four rail-mounted gantry cranes and 36 rubber-tyred gantry cranes), 324 reefer container ground slots (that include 1,620 reefer plugs) and four railway lines.

One of the biggest projects at Kamarajar port was completed by Adani Ports and Special Economic Zone Limited (APSEZL) in June 2017. The container terminal at the port, Adani Ennore Container Terminal, was developed at an investment of Rs 12.7 billion and added 16.8 million tonnes per annum (mtpa) of capacity. Another important project commissioned involved the mechanisation and operation of three iron ore berths (two outer harbour berths and one inner harbour berth) at Visakhapatnam port. The project, implemented at a cost of Rs 8.45 billion, added 23 mtpa capacity at the port.

Under-construction projects

Among the projects tracked, 30 projects entailing a total investment of Rs 716.97 billion are under implementation. Overall, these projects are expected to create more than 258 mtpa of capacity. Most of the projects are expected to be commissioned after 2019. Of the projects, 13 are being implemented on a PPP basis.

The biggest greenfield project currently under construction is the Vizhinjam international container transhipment terminal project involving an investment of Rs 75.25 billion. The project was awarded to the sole bidder, APSEZL, on June 10, 2015. This was the fourth attempt to award tenders for the project. The project faced inordinate delays due to several reasons, such as delays in security clearances, legal issues, and changes in its development model. In February 2015, the Ministry of Finance granted approval for viability gap funding of Rs 16.35 billion for the project, marking the first time such funding was granted for an Indian port project. Construction work on the project commenced in December 2015 and is scheduled to be completed by November 2019.

At the non-major ports, one big-ticket project under construction is the development of a liquefied natural gas (LNG) terminal at APSEZL-operated Dhamra port. The terminal is being developed at a cost of Rs 60 billion and will add 5 mtpa of capacity upon completion. The foundation stone for the project was laid in July 2017 and the project is scheduled to be completed by 2020-21.

In terms of new non-major port development, an investment-heavy port is coming up at Nargol. The new port is being developed by the Gujarat Maritime Board on a PPP basis. The project is expected to add a capacity of 26 mtpa (at a cost of Rs 61.57 billion) and is expected to be completed by 2019.

Projects awarded but work not yet started

Of the awarded projects tracked, six projects worth Rs 50.48 billion were awarded at the major ports. Once completed, these will add a capacity of 72.44 mtpa. The biggest project in this category at the major ports is the mechanisation of Eastern Quay (EQ)-1, EQ-2 and EQ-3 berths at Paradip port. Involving an investment of Rs 16.34 billion, the project will add a capacity of 30 mtpa at the port and is scheduled to be completed by 2020.

The new non-major port that is yet to start construction work is Phase IA of Astaranga port. The Odisha government has awarded the project to Navayuga Engineering Company Limited. The project, which is expected to cost Rs 74 billion, will have a capacity of 17.7 mtpa (Phase I). Another new non-major port being developed in Odisha is Subarnarekha port. The port project, involving an investment of Rs 28 billion, has faced considerable delays due to land acquisition. The concession agreement was signed in December 2008. As of November 2017, the Odisha government has decided to transfer 692 acres of land for developing Phase I of the project. The land for the project would be leased out to the concessionaire once the law department scrutinises the land area. A special purpose vehicle, Subarnarekha Port Private Limited, has been incorporated for project execution.

Projects announced

Forty-three projects worth Rs 1,974.47 billion have been announced in the sector. Once completed, these will add more than 400 mtpa of capacity at Indian ports. Of these, nine projects are at the bidding stage, while the rest are at the preliminary/planning stage.

Among the major ports, projects worth

Rs 102.88 billion are at the bidding stage and are targeted to be awarded in the next one year. The biggest project under bidding is the floating, storage and regasification unit (FSRU) for LNG handling at Mumbai port involving an investment of Rs 30 billion. Another big project at the bidding stage is the FSRU for LNG handling at New Mangalore port. Entailing an investment of Rs 25 billion, the project is being implemented on a PPP basis.

Among the announced projects, one of the big-ticket projects involving large investments is the development of a smart industrial port city (SIPC) at Paradip port. The project is expected to cost Rs 400 billion and will be developed through the PPP mode. The SIPC has been envisaged on nearly 1,600 acres of land, of which nearly 600 acres has been earmarked for a multimodal logistics park (MMLP) and an industrial park. The MMLP will comprise a free trade warehousing zone reserved for the warehousing and processing industry, a truck parking area, warehouses, a container yard and an empty container yard. The project’s master plan is in final stages of approval.

Conclusion

According to India Infrastructure Research, the port sector offers a pipeline of 84 projects that are either under implementation or are to be taken up in the future (under construction, awarded, announced/approved or in the bidding stage and awarded). These projects will entail investments of over Rs 2.9 trillion. Overall, the projects in the pipeline are expected to create more than 790 mtpa of additional capacity providing opportunities for developers, contractors, equipment providers, consultants and material providers.