The past few years have seen a surge in competition between the major and non-major ports. The port sector is gradually moving away from the monopolistic market model to a more competitive one. The non-major ports currently account for close to 43 per cent of the total cargo traffic handled at Indian ports, a sharp increase from a share of 24 per cent in 2000-01. This increase in cargo share has been primarily led by the growth in private ports. While this scenario has motivated the major ports to initiate performance improvement measures, it has also pushed the non-major ports to create fresh capacity. As a result, maritime states have accelerated their efforts to further develop these ports.
Testing the waters
According to India Infrastructure Research, 21 non-major ports involving an investment of more than Rs 875 billion have been planned. Upon completion, these projects are expected to add over 645 million tonnes of capacity. Of these non-major ports, 10 are at a preliminary/planning stage (proposed, announced and in the bidding stage), seven projects have been awarded, construction work has commenced on three port projects, and one is stalled at present.
Overall, the implementation of these greenfield port projects has been quite slow due to a number of issues. Key among these are delays in land acquisition and obtaining the necessary clearances (coastal regulation zone and environmental clearances).
Indian Infrastructure provides an update of key projects…
Astaranga port, Odisha: The port is being developed by Navayuga Engineering Company Limited (NECL). The project requires 3,899 acres in 11 villages of Astaranga tehsil. Land acquisition in seven villages is pending due to ongoing litigation in the Odisha High Court. As of February 2018, NCEL has refused to continue with the land acquisition process in the remaining four villages of Kusambar, Timar, Nanpur and Patadala. It will be resumed only after the settlement of the court cases. Meanwhile, NECL has been asked to obtain environmental clearance from the Ministry of Environment, Forest and Climate Change (MoEFCC).
Azhikkal port, Kerala: Proposed to be developed in two phases, the Kerala state cabinet approved the formation of a special purpose vehicle (SPV) for the development of the port in September 2017. Following this, the state government sanctioned the project in October 2017. Developmental works on Phase I of the project are expected to commence by 2019 and are scheduled to be completed by June 2020. Phase II works are expected to be completed by June 2021.
Beypore port, Kerala: Being developed by INKEL Limited, the scope of work involves the construction of a dedicated berth for handling cargo and passenger vessels to and from Lakshadweep, and other infrastructure facilities. Meanwhile, in a bid to facilitate hinterland connectivity to the port, the central government has directed the National Highways Authority of India to conduct a feasibility study for the Beypore port-Malaparamba junction road connectivity project.
Bhavanapadu port, Andhra Pradesh: In January 2018, the Andhra Pradesh government approved the award of the contract for port development to Adani Ports and Special Economic Zone Limited (APSEZL). APSEZL had emerged as the sole bidder for the project. However, according to the state government, the revenue share offered by APSEZL was lower than expected. After a round of negotiations, the concessionaire agreed to offer a higher revenue share to the state government. As per the revised proposal, APSEZL will now give 2.3 per cent of the port revenues to the government for the first 30 years, a 4.6 per cent share for the next 10 years, followed by 9.2 per cent revenue share thereafter. The Andhra Pradesh government will hand over 2,500 acres of land along with the waterfront zone to APSEZL to create logistics and industrial infrastructure facilities for the project.
Chudamani port, Odisha: The Odisha government had earlier signed an MoU with the Aditya Birla Group for the construction of the port. However, a public interest litigation was filed in the Odisha High Court seeking intervention against signing of agreements with private developers for developing the minor port without going through an open bidding process. The government is now taking the requisite steps to renew the MoU.
Dahej port, Gujarat: Construction work on the port is currently in progress and will be taken up in two phases. Phase I entails the construction of two solid cargo terminals, a liquid cargo terminal and a container terminal at a cost of around Rs 25 billion while Phase II will involve development of one terminal each for handling solid, liquid and container cargo. Bids to acquire the 74 per cent stake owned by Sterling Port Limited in the project were invited in November 2017. A consortium of ILog Port (Dahej) Private Limited (wholly owned by Srei Infrastructure Finance Limited) and JSW Infrastructure Limited is likely to acquire the 74 per cent stake in the port.
Devbhumi Dwarka commercial port, Gujarat: The port will be developed to handle bulk cargo, general cargo, liquids including petroleum, oil and lubricants, chemicals and liquefied petroleum gas. Essar Ports Limited (EPL) has signed an MoU with the Gujarat Maritime Board for developing the port. Currently, work on the detailed project report (DPR) is under way.
Jalna port, Maharashtra: Proposed to be set up in Jalna district, the dry port is expected to cater to the entire Marathwada region comprising the Aurangabad, Nanded, Parbhani, Latur, Beed, Hingoli, Jalna and Osmanabad districts. The DPR has been prepared and the ground works have started.
Machilipatnam port, Andhra Pradesh: The Andhra Pradesh government granted permission to Machilipatnam Port Limited to start the preliminary works for port development in May 2017. Meanwhile, the state government has signed an MoU with Container Corporation of India Limited for the development of an integrated logistics and manufacturing zone (ILMZ) under Phase I of the project. The ILMZ is to be developed on at least 1,000 acres of land near Kona village.
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. In November 2017, the expert appraisal committee of the MoEFCC deferred the decision to grant the environmental clearance and sought additional information from the project developer.
Ponnani port, Kerala: The project is being developed by Malabar Ports Private Limited at an investment of Rs 20 billion. The port requires 350 acres of land of which the Kerala government has acquired 29.3 acres. The acquired land will be leased to Malabar Ports for a period of 33 years. Reclamation works for the project commenced in 2015 and were scheduled to be completed by December 2018. However, the work had reportedly come to a halt due to undisclosed reasons.
Rewas port, Maharashtra: The Maharashtra Maritime Board (MMB) has awarded the contract for the valuation of Rewas Port Limited (RPL) to the joint venture of SBI Capital Markets Limited and Kakode Associates Private Limited. RPL, promoted by the Reliance Group, was incorporated as an SPV for the development, operation and management of the proposed port. MMB is undertaking the valuation of RPL to ascertain the value of the port so that the government can take over the port project from Reliance Industries Limited. At present, an RIL arm, Reliance Logistics and Ports, holds a 55 per cent stake in RPL. The remaining the stake is held by Amma Lines (24 per cent), MMB (11 per cent) and Jai Corporation (10 per cent).
Riverine port on Mahanadi river, Odisha: The port project is planned on the Mahanadi river at Akhadasali village in Kendrapada district. The port’s cargo potential is estimated at 44 million tonnes per annum. At present, APSEZL, EPL, DP World and NECL have qualified to bid at the request for proposal stage for port development.
Subarnarekha port, Odisha: In January 2017, Tata Steel Limited (TSL) signed a definitive agreement with Creative Port Development Private Limited (CPDPL) for the development of the port. As per the terms of the agreement, TSL will acquire a 51 per cent stake in CPDPL, for which the outlay has been kept at Rs 1.2 billion. Port development will be undertaken by CPDPL’s wholly owned subsidiary, Subarnarekha Port Private Limited. Meanwhile, the Odisha government has decided to transfer 692 acres of land for Phase I development of the port. The land for the project will be leased out to the concessionaire once the law department scrutinises the land area. Construction work on Phase I is expected to commence by July 2018.
Sagar and Tajpur ports, West Bengal: After the dilemma on the development of the Tajpur and Sagar ports, the Kolkata Port Trust has decided to undertake the implementation of both the ports in phases. While Tajpur port will be taken up in the first phase, Sagar port will be taken up in the next.
To be set up in the South 24 Parganas district of West Bengal, Sagar port is being developed to handle coal, ore, containers, steel products, fertilisers, sugar, foodgrains, etc. It will cater to power and steel plants in the eastern region, and containers from the eastern parts of the country and the neighbouring landlocked countries of Nepal and Bhutan.
The bids for the development of Tajpur port are expected to be issued after the completion of the feasibility study for the project. Meanwhile, in September 2017, the Saudi Arabian Oil Company evinced an interest in developing the port. However, no final decision has been taken yet. Phase I of the project is likely to be completed by end 2019.
Tadadi port, Karnataka: The project is being implemented by the Karnataka State Industrial Investment and Development Corporation and an SPV, Tadadi Port Limited, was incorporated for project execution. In April 2017, the Indian Institute of Science (IISc) requested the central government to shelve port development. A letter in this regard was sent to the government in March 2017 along with the request to not grant environmental clearance to the proposed port. As per the letter, environmentalists have questioned the need to develop the port as extraction and shipping of iron ore is banned in the area. Besides, the project falls under the coastal regulation zone-1 area and will require the removal of mangroves which is against the norms of the MoEFCC.
Vijaydurg port, Maharashtra: The central government has initiated the techno-economic feasibility study for the development of the satellite port at Vijaydurg. The port has been planned to cater to the west coast refinery and petrochemicals complex being planned by Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited. The port will be developed through a joint venture between the Mormugao Port Trust (MPT), MMB and the Mumbai Port Trust under the integrated port development scheme of the central government. Meanwhile, MPT has appointed Tata Consulting Engineers Limited for the techno-economic feasibility study.
Vizhinjam port, Kerala: The port is being developed by Adani Vizhinjam Port Private Limited, a wholly owned subsidiary of APSEZL, at a cost of Rs 75 billion. Work on the port is progressing well with Phase I scheduled to be completed by December 2019.
Wardha port, Maharashtra: The proposed dry port is planned to be constructed over an area of 350 acres in a phased manner, at an investment of Rs 5 billion. Phase I of the project will involve the development of around 25 hectares of the total area at an estimated cost of Rs 1.8 billion (including private investment of Rs 790 million). The foundation stone for the dry port was laid in October 2017.
Yogayatan port, Maharashtra: The port is situated at Thane creek near Mankhurd in Maharashtra. The foundation stone for the port was laid in December 2015. The port is to be developed by the Yogayatan Group at an investment of Rs 2.5 billion.
Overall, the progress of the greenfield port projects has been slow, with very few of these moving from the proposal/preliminary stage to the implementation stage, owing to number of issues. There is a need to fast-track the process of obtaining 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.