Interview with Gopal Krishna

“The entry of the private sector has given a great fillip to port development”

Gopal Krishna Secretary, Ministry of Shipping

Over the years, the infrastructure and capacity of major ports in India have grown considerably. The Ministry of Shipping has also introduced a number of policies and reforms such as the standardisation of request for quotation (RfQ) and request for proposal (RfP) and revision of the model concession agreement (MCA) to bring uniformity and transparency in the public-private partnership (PPP) process. Meanwhile, the Sagarmala programme aims to double the share of domestic waterways in the modal mix and reduce logistics cost. In an interview with Indian Infrastructure, Gopal Krishna, secretary, Ministry of Shipping, shares his views on the progress made in the ports and shipping (P&S) sector, experience with the major policies/programmes, the evolving role of PPP, the biggest accomplishments of the ministry, progress on the Sagarmala Programme, the key challenges facing the sector and future priority areas…

How do you assess the progress made in the P&S sector over the past two decades?

Ports play a vital role in the overall economic development of the country. About 90 per cent by volume and 70 per cent by value of the country’s international trade is carried out through maritime transport. It is imperative that the infrastructure and capacity of the ports continue to be augmented so as to handle the ever increasing trade volume. With this focus in view, the expansion, modernisation, development and upgradation of port infrastructure in the country is an ongoing process. As a result, the capacity of the major ports has increased manyfold during the past decades. The capacity of these ports to handle cargo traffic has increased to 1,451 million tonnes per annum (mtpa) as of March 31, 2018, which was sufficient to handle the cargo traffic of 679 mt in 2017-18. The draught at major ports has also improved considerably over the years. Currently, 10 of the 12 major ports have a draught of at least 14 metres or more. However, the focus of the ministry is on further improving the draught of the ports so as to enable the ports to handle larger vessels and compete with leading foreign ports.

What are the biggest policies/programmes that have shaped the sector?

Over the years, the infrastructure development and capacity augmentation of major ports has grown considerably. This has been possible due to a number of policy initiatives taken by the government. These include improvement in infrastructure, modernisation of the facilities, a better logistics chain, withdrawal of the licensing system, increased avenues for special economic zones. The entry of the private sector has given a great fillip to the development of ports. The port sector has been declared as infrastructure, thereby attracting a vast amount of foreign direct investment (FDI). Though the government has been encouraging private sector participation in port development since 1996, this decade has witnessed a vast increase in private sector participation in the port projects. This has been mainly on account of various measures taken by the government like the standardisation of RfQ, RfP and MCA documents aimed at bringing uniformity and transparency in the PPP process. Further, an MCA, which was put in place in 2008, has been subsequently revised in 2018 to enhance the confidence of investors for the implementation of PPP projects in major ports.

How has the role of PPPs evolved in the P&S sector over the past two decades?

To fully utilise the potential, resources and professionalism of the private sector, and augment operational efficiencies in major ports, active steps have been taken to create an enabling investor friendly environment in the port sector. FDI up to 100 per cent under the automatic route is permitted in the port sector. To ensure transparency in the selection of the PPP operator, the selection is done through open competitive bidding for which the bid documents have been standardised. An MCA to be entered into by the port authority with the selected bidder for developing the project facilities and rendering port services has been formulated. There are 41 PPP projects already in operation at major ports involving an investment of Rs 208.22 billion and 16 more projects with an investment of Rs 205.77 billion are under implementation. Some of the big PPP projects already in operation are the four container terminals at Jawaharlal Nehru Port, the International Container Transhipment Terminal at Cochin Port, the dry bulk terminal and oil jetty with related facilities at Kandla. Some of the big projects under implementation are the development of an LNG terminal at Kamarajar Port, mechanisation of EQ1 to EQ3 berths and development of deep draught iron ore berth at Paradip, mechanisation of iron ore handling facilities at Visakhapatnam, and conversion of barge berths 8, 9 and the mechanical ore handling plant as multipurpose cargo berth at Mormugao.

How different are the current challenges facing the P&S sector from those faced two decade ago? What are some of the strategies needed to overcome these challenges?

Global competition has changed the world. This has an impact on the developments of ports in India as well. There is a clear trend towards the global ownership and management of port terminals in some of the major ports. This also leads to cut-throat competition and thereby results in the transfer of a range of public-owned port-related activities to a privately owned undertaking, and brings in efficiency. Thus, there is a need for ports to move to a landlord system whereby they would be the owner of the land and major infrastructure like breakwater and entrance channel while the other activities/operations at the port may be handled by the other operators.

Of late, a number of private ports have come up/are coming up in the country. The emergence of a large number of state and private ports and private terminals in the vicinity of major ports are posing stiff competition to the major ports. This has necessitated the major ports to focus more on improving their efficiency and productivity by way of reducing their dwell time and logistics costs. To stay competitive, the major ports have to continuously focus on the modernisation and upgradation of their facilities to meet the needs and requirements of port users to their satisfaction. The investment, managerial capabilities and skills required for this pose a great challenge for the port authorities. PPP is thus the preferred mode in port infrastructure development and capacity augmentation projects.

Shipping and cargo handling technologies are changing rapidly. The size of ships/vessels is getting bigger and this requires deeper drafts and infrastructure at ports to handle these ships/vessels. Cargo handling takes place in many forms – bulk, break bulk, liquid bulk as well as in containers. Containerised traffic is the most prominent type in the era of growing industrial exports. These changes have an influence on the method of working and labour deployment at the terminals. More mechanisation, unitisation of cargo and computerisation are becoming imperative. Manning scales have to be changed. The workforce needs to be better educated and more skilled. With the percentage of containerisation growing steadily, the growth of container traffic is becoming more and more significant. In order to meet this growing global demand, the major ports in India have to adopt modern cargo handling technologies.

What are the ministry’s top priorities and focus areas for the next two to three years?

The biggest priorities in the port sector are additional cargo building and augmentation, improvement in the efficiency and productivity standards set by comparable ports at the international stage and ensuring connectivity to the ports by working closely with the railways and road authorities. Besides, the focus has to be on the promotion of coastal shipping, transshipment and cruise tourism.

What have been the ministry’s biggest accomplishments in the past few years?

Some of the biggest achievements in the past few years are as follows:

  • Drastic improvement in turnaround time (overall). It has come down from 126 hours in 2010-11 to 64 hours in 2017-18.
  • Massive augmentation in the total cargo handling capacity of major ports. Against the installed capacity of 1,451 mtpa of major ports, the traffic handled by major ports during 2017-18 stood at 679 mt.
  • Deedayal (Kandla) Port became the first major port to reach 100 mt traffic in 2016-17 and Paradip Port became the second major port to achieve the milestone of handling 100 mt of cargo during 2017-18.
  • India is engaging itself in the development of Chabahar Port in Iran, for which an MoU has been signed between the two countries. On October 29, 2017, the external affairs minister of India flagged off the first shipment of 16,318 mt wheat to Afghanistan from Kandla via Chabahar Port.
  • During the visit of the President of Iran on February 17, 2018, an MoU for interim operations was signed between India and Iran on Chabahar Port.
  • The Phase I of the Fourth Container Terminal project at the Jawaharlal Nehru Port Trust (JNPT) became operational in February 2018. It is India’s largest FDI project in the port sector. The project envisaged a capacity addition of 4.8 million TEUs at an investment of Rs 79.35 billion.
  • The maiden Maritime India Summit, 2016 was held on April 14–16, 2016, in Mumbai. A total of 141 business agreements amounting to about Rs 830 billion were signed during the summit. While 24 MoUs/business agreements amounting Rs 104.11 billion approximately were completed during 2016-17, 100 MoUs/business agreements with an investment worth Rs 757.14 billion are under implementation.

New policies framed and implemented:

  • The new captive policy for major ports, effective July 2016, to encourage port-dependent industries.
  • New Berthing Policy (August 2016) to increase productivity and transparency.
  • New Stevedoring Policy (July 2016) for port efficiency and revenue optimisation .
  • New dredging guidelines for capital/maintenance dredging at major ports were issued by the ministry in August 2016.
  • Revised guidelines were issued on January 31, 2018 for enhancing the validity period of security clearance of bidders/companies participating in PPP projects and dredging projects at major ports from 3-5 years so as to harmonise it with the validity period followed by the Ministry of Home Affairs.
  • The Major Port Authorities Bill, which was introduced in the Lok Sabha in December 2016 to modernise the institutional structure of ports to usher in professional governance at ports, is awaiting consideration and passing by the Lok Sabha. This will replace the existing Major Port Trusts Act, 1963 and will provide more autonomy and freedom to the major ports.

What has been the progress under the Sagarmala programme? What are the targets and achievements in terms of project award and completion?

The Sagarmala programme is the flagship programme of the Ministry of Shipping to promote port-led development in the country by harnessing India’s 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes. Projects under Sagarmala are being implemented by relevant central ministries, state governments, ports and other agencies primarily through the private or PPP mode. To assist in the implementation of residual projects, Sagarmala Development Company Limited (SDCL) was incorporated on August 31, 2016, after receiving cabinet approval on July 20, 2016, for providing funding support to project special purpose vehicles and residual projects under Sagarmala. SDCL has identified a few projects for the purpose of equity investment in line with Sagarmala objectives. SDCL is also in the process of DPR preparation for specific projects that could provide avenues for future equity investment by the company. Indian Port Rail Corporation Limited was incorporated on July 10, 2015 to undertake port-rail connectivity projects under the Sagarmala Programme.

A total of 605 projects have been identified so far under the Sagarmala Programme. These are expected to mobilise more than Rs 8.7 trillion of infrastructure investment. The programme aims to double the share of domestic waterways (inland and coastal) in the modal mix, generate logistics cost savings of Rs 350-400 billion per annum, boost merchandise exports by $110 billion and enable the creation of 10 million new jobs, including 4 million direct jobs, in the next 10 years. Of the 605 projects identified so far, 80 projects (worth Rs 137.01 billion) have been completed. In the year 2018-19, 109 projects (Rs 505.10 billion) are likely to be completed. Of the 605 Sagarmala projects identified so far, 523 projects worth Rs 4.32 trillion are already under various stages of implementation and development.

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