Recent Developments: A year of important policy interventions

A year of important policy interventions

The past year has been an important one for the port sector. Several key developments have taken place centred on port modernisation and the promotion of ease of doing business. Progress was noted in the completion as well as award of several key capacity augmentation projects at ports, the introduction of key policy and regulatory measures, the inauguration of new terminals, etc.

Indian Infrastructure provides a snapshot of recent key developments…

  • A number of important policy and regulatory measures were introduced. The Ministry of Shipping (MoS) allowed the relaxation of coastal movement of export-import (exim) transshipment containers and empty containers, under Section 407 of the Merchant Shipping Act, 1958. It has permitted foreign flag ships to carry exim-laden containers for transshipment and empty containers for repositioning on local routes without a licence or other conditions.
  • In early 2018, the central government approved amendments in the model concession agreement (MCA) for public-private partnership (PPP)-based port projects. Besides other salient features, the MCA amendments envisage the constitution of the Society for Affordable Redressal of Disputes – Ports as a dispute resolution mechanism similar to that in the highways sector. Further, in February 2018, the cabinet approved amendments in the Major Port Authorities Bill, 2016, based on the recommendations of the parliamentary standing committee.
  • The Rajya Sabha passed the Admiralty (Jurisdiction and Settlement of Maritime Claims) Bill, 2017, with the aim of establishing a legal framework to consolidate the existing laws relating to admiralty jurisdiction of courts, admiralty proceedings on maritime claims, arrest of vessels and other related issues.
  • Meanwhile, the MoS has proposed the revision of the Indian Ports Act, 1908. A draft for this, the Indian Ports Bill, 2018, has been prepared accordingly. The ministry has invited comments on the draft bill from all concerned stakeholders, and were to be submitted by June 1, 2018.
  • Under the Union Budget 2018-19, the MoS received an allocation of Rs 18.81 billion (budget estimates). The allocation is higher than the budget estimate of Rs 17.73 billion and the revised estimate of Rs 15.68 billion for 2017-18. Meanwhile, the government has accorded infrastructure status to the logistics sector. This will, in turn, give an impetus to infrastructure development at ports since the new status will make infrastructure finance available on easier terms and with enhanced limits.
  • In October 2017, the cabinet approved the sale of the government’s entire 73.47 per cent stake in Dredging Corporation of India Limited.
  • In a bid to simplify clearance procedures, the Ministry of Home Affairs has waived the requirement of biometric enrolment for cruise passengers arriving on e-visas at the five major seaports of Mumbai, Mormugao, New Mangalore, Cochin and Chennai. The exemption has been granted for a period of three years (till December 31, 2020).
  • In January 2018, the Directorate General of Foreign Trade allowed the import of nonstandard steel products through Nhava Sheva, Mumbai and the Tughlakabad inland container depot, besides the existing customs seaports at Mumbai, Chennai and Kolkata.
  • To give a push to coastal traffic at ports, the Coastal Berth Scheme under the Sagarmala programme has been extended for three years, up to March 31, 2020. Its scope has also been expanded to cover capital dredging at the major ports and the preparation of detailed project reports for coastal berth projects. Under Sagarmala, the government also gave its approval for setting up a mega coastal economic zone at the Jawaharlal Nehru Port Trust (JNPT). The project envisages an investment of Rs 150 billion in the first phase.
  • At the state level, the Kerala legislative assembly passed the Kerala Maritime Board Bill. The bill envisages the development of minor ports, and coastal shipping and navigation, which are currently looked after by various state departments. In another development, the state cabinet approved the formation of a special purpose vehicle (SPV) for the development of Azhikkal port. The SPV is expected to have a capital of Rs 1 billion and the project will be undertaken in two phases with Phases I and II of developmental works scheduled for completion by June 2020 and June 2021 respectively.
  • The past year witnessed the inauguration of several new projects. Phase I of the much-awaited fourth container terminal (FCT) at JNPT, the Bharat Mumbai Container Terminal, was inaugurated. The terminal commenced operations with the maiden vessel docking on February 2, 2018, as a part of the trial operations. The FCT is being developed in two phases, of which Phase I entailed an investment of Rs 47.19 billion, while Phase II is estimated to cost Rs 31.96 billion. Construction work on the multi-user liquid terminal jetty for unloading liquefied petroleum gas at Cochin port has also been completed at an investment of about Rs 2.25 billion.
  • The other key projects that were inaugurated include the development of a container terminal, a multi-cargo terminal, and rail connectivity to the container and multi-cargo terminals at Kamarajar port (Rs 14.92 billion); and a truck parking terminal at Y junction and a green channel berth at Visakhapatnam port.
  • With regard to non-major ports, an edible oil terminal and storage regasification unit-based liquefied natural gas terminal were also inaugurated at JSW Jaigarh port. Moreover, Phase II of the expansion project at Dhamra port was inaugurated during the year, which involved the construction of three berths for dry bulk cargo, four berths for break bulk cargo and general cargo, two liquid/gas cargo jetties, two berths for container cargo, and one mooring facility for transloading operations, among others. Meanwhile, the first phase of the Rs 6.15 billion roll-on roll-off ferry service between Ghogha in Saurashtra and Dahej in south Gujarat was inaugurated in October 2017.
  • Foundation stones were laid for some important projects. These include the Wardha dry port project, at an investment of Rs 5 billion; an international ship repair facility at Cochin port, at an investment of Rs 9.7 billion; and an international cruise terminal at Mumbai port, involving an investment of Rs 3 billion.
  • Several projects have been awarded in the past year. In May 2018, Kalinga International Coal Terminal Paradip Private Limited awarded the contract for the construction of piling, a diaphragm wall and berth deck at Paradip port to L&T GeoStructures Limited. In August 2017, a consortium led by Kakinada Seaports Limited secured the rights to develop and operate a coal handling terminal with a capacity of 10 million tonnes (mt) for 30 years at Paradip port. In November 2017, Atlantic, Gulf and Pacific Company signed an agreement with Karaikal Port Private Limited to develop a LNG import terminal at the port. Earlier in October 2017, the Andhra Pradesh Economic Development Board signed an MoU with Bin Zayed Group for development of the Ramayapatnam greenfield port project.
  • Several ports have deployed new technologies in order to promote the ease of doing business. In April 2018, the Nhava Sheva International Container Terminal in collaboration with the Jawaharlal Nehru Customs House introduced “on-wheel examination and sampling” for full-container-load shipments under the direct port delivery scheme. In early 2018, the Kolkata Port Trust initiated a truck chit system for the movement of vehicles and containers at the Kolkata Dock System container terminal. In October 2017, the Jawaharlal Nehru Port Container Terminal migrated its terminal operating system to the SPARCS N4 platform. Effective from September 1, 2017, the Cochin Port Trust made the use of the vessel call number and the import general manifest link facility at the port community system mandatory. In June 2017, Krishnapatnam port automated its fertiliser handling system to handle end-to-end fertiliser cargo operations in addition to the implementation of e-Xpressway for its container operations.
  • On the financial front, several developments have taken place in the past year. In a recent development, the Cabinet Committee on Economic Affairs approved the waiver of penal interest on government loans advanced to the Visakhapatnam Port Trust and Paradip Port Trust during May 2018. In November 2017, the V.O. Chidambaranar Port Trust (VOCPT) appointed SBI Capital Markets Limited to raise dollar-denominated external commercial borrowings (ECBs) to part-fund the channel deepening and breakwater construction project at the port. The project is estimated to entail an investment of Rs 34.62 billion and VOCPT intends to raise ECBs amounting to Rs 20 billion for the project. Earlier, in July 2017, Adani Ports and Special Economic Zone Limited raised $275 million through unsecured notes.
  • To promote the development of the port sector, India also signed a number of agreements with several countries across areas of connectivity, shipping and tourism. At the bilateral level, India signed MoUs with Bangladesh, Cyprus, Spain and the United Arab Emirates primarily in the areas of connectivity, shipping and tourism between the countries.