In the past year, the government has unveiled several initiatives aimed at developing the Indian port sector and sustaining its growth. Several key developments have been centred on port modernisation and the promotion of ease of doing business. Progress has also been documented with respect to project completion, award and the start of new construction works.
Indian Infrastructure provides a snapshot of recent developments in the port sector…
- The government has shown strong intent of resolving the pending issues of private players. In September 2018, the Ministry of Shipping (MoS) cleared a bailout plan for stressed public-private partnership (PPP) projects at the major ports. In addition, the MoS has finalised the criteria for identification/classification of stressed projects at the major ports. It has prepared a three-point formula that includes extending the free storage period at the major ports (as compared to that available at nearby private ports) with a view to optimising capacity utilisation of berths. In a separate development, the MoS has opened a four-month window for PPP cargo terminals at the major ports operating under the restrictive 2005 rate regime to migrate to the market-driven pricing structure finalised in 2013 for new projects and has set terms and conditions for the move.
- The central government finally completed the divestment of its 73.47 per cent stake in the Dredging Corporation of India (DCI) in March 2019, selling its share to four major ports. The Visakhapatnam Port Trust (VPT) acquired a 19.44 per cent stake in DCI, while the Jawaharlal Nehru Port Trust (JNPT), the Deendayal Port Trust (DPT) and the Paradip Port Trust acquired the remaining 54 per cent stake (18 per cent each).
- A number of modernisation, mechanisation and digitalisation initiatives were taken at the major ports to promote ease of doing business. In March 2019, the Central Board of Indirect Taxes and Customs introduced “Turant Customs” as part of the next-generation reforms to further improve the ease of doing business. In line with the Make in India and Digital India initiatives, in December 2018, the Indian Ports Association (IPA) launched a port community system, PCS1x. It is a cloud-based new-generation technology, with a user-friendly interface. In October 2018, DMICDC Logistics Data Services Limited implemented its digital container tracking solution at Cochin port. During the same month, the IPA appointed Tech Mahindra as the managed service provider for five major ports – Mumbai, Kolkata, Chennai, Deendayal and Paradip.
- Visakhapatnam Container Terminal Private Limited procured two post-Panamax quay cranes and four rubber-tyred gantry cranes from ZPMC, China, in July 2018.
- The year also witnessed the inauguration of several new projects. These include a mechanised coal handling facility at New Mangalore port (10 million tonnes per annum [mtpa]), cargo berth nos. 14 and 16 at Deendayal port (9 mtpa), a multi-purpose clean cargo berth at Paradip port (5 mtpa), a modernised cruise terminal facility at West Quay IV in Chennai port, a fourth cement terminal at Cochin port (0.5 mtpa) and a mechanised iron ore handling complex built on the outer harbour of Visakhapatnam port (24 mtpa).
- In March 2019, the central government incorporated a special purpose vehicle – Kanniyakumari Port Limited – for the development of a new major port in Kanniyakumari district of Tamil Nadu. Kanniyakumari Port Limited is a three-way joint venture between the V.O. Chidambaranar Port Trust, Kamarajar Port Limited and the Chennai Port Trust (ChPT).
- In addition, foundation stones were laid for some important projects at Paradip port. These projects were for the development of a liquefied petroleum gas terminal at the south oil jetty, a new coal import berth, a multimodal logistics park, the mechanisation of three coal handling berths, the construction of a second exit road and a flyover from the port, and providing connectivity to the mechanised coal handling plant and iron ore handling plant. The cumulative cost of these projects is Rs 32.06 billion.
- Other key projects for which foundation stones were laid include the expansion of the JNPT Mumbai navigational channel and development of a free trade warehousing zone (FTWZ) at JNPT. The FTWZ is being developed by Hindustan Infralog Private Limited, a joint venture of DP World and National Investment and Infrastructure Fund Limited.
- In August 2018, DPT’s board approved the implementation of three projects at the port. The approval was for the revised master plan layout for the Kandla location (Location 2) of the smart industrial port city at the Kandla-Gandhidham-Adipur complex, detailed estimates for the development of a mechanised fertiliser handling facility at berth no. 14 and the appointment of Indian Port Rail Corporation Limited for undertaking a traffic study and financial modelling of the Jaisalmer-Bhabhar section of the Jaisalmer-Kandla port-rail connectivity project. Meanwhile, in June 2018, the standing finance committee of the MoS cleared the project for setting up an exclusive, fully mechanised fertiliser handling facility at Deendayal port. The facility will be developed at berth no. 14, which is being constructed at an investment of Rs 1.38 billion.
- Several projects were awarded in the past year. VPT awarded a Rs 24.78 million contract to Lalitha Constructions for the development of the backup area behind eastern quay (EQ) berths (EQ-2 to EQ-5) including drainage facilities at the dock area. Sadbhav Infrastructure Project Limited awarded the contract, valued at Rs 1.8 billion, for structural works under the Visakhapatnam port four-lane road connectivity project to Vijay Nirman Company Private Limited.
- The past year also saw the award of some major dredging projects to DCI. ChPT issued a letter of acceptance to DCI for capital dredging alongside Jawahar Dock (JD) 4 and 6 and JD west berths for deepening up to 14 metres chart datum (CD), and a new coastal berth for deepening up to 9 metres CD at the port. The Cochin Port Trust also awarded the maintenance dredging contract for 2019-20 to DCI (Rs 1,140 million).
- With regard to non-major ports, the Odisha government inaugurated the second and third berths under the Gopalpur port expansion project in March 2019. The scope of work of the project involved expansion of cargo handling capacity at the port from the existing 3.5 mtpa to 20 mtpa. In addition, the Maharashtra government inaugurated the Karanja terminal, a port and logistics facility complex at the Karanja creek in Raigad district.
- In July 2018, Adani Ports and Special Economic Zone Limited (APSEZL) signed a long-term agreement with GAIL (India) Limited to provide liquefied natural gas (LNG) regasification services on a use or pay basis at its upcoming LNG import terminal at Dhamra. The company also executed a share purchase agreement among Larsen & Toubro (L&T), Marine Infrastructure Developer Private Limited (MIDPL), L&T Shipbuilding Limited and Adani Kattupalli Port Private Limited to acquire a 97 per cent stake in MIDPL, which is the developer and operator of Kattupalli port.
- The past year also witnessed technological developments at non-major ports. Navayuga Container Terminal Private Limited (erstwhile Krishnapatnam Port Container Terminal Private Limited) announced the installation of Rapiscan Eagle P 60, a drive through x-ray container scanner and radiation portal monitor. One of the fastest growing container terminals on the east coast, the Navayuga terminal commissioned five electrical rubber-tyred gantry cranes at the port in July 2018.
- Several developments have taken place with respect to greenfield non-major ports. The foundation stone for Phase I of the Machilipatnam port project was laid in February 2019. The project contractor, Navayuga Engineering Company Limited, has commenced construction work on the project. In January 2019, the foundation stone was laid for the development of the Ramayapatnam greenfield port project. Besides, the Andhra Pradesh government has granted administrative sanction of Rs 59 million for appointing RITES Limited for the development of the Ramayapatnam greenfield port. In January 2019, an MoU was signed between the Andhra Pradesh Economic Development Board and the JSW Jaigarh Group for the construction of a jetty and slurry pipeline at the upcoming port.
- Earlier, in end 2018, the foundation stone was laid for the greenfield commercial port at Kakinada. Following this, the state government signed an MoU with Haldia Petrochemicals Limited for a refinery/petrochemicals project in the Kakinada special economic zone.
The long-term outlook for the sector remains positive, on the back of a series of policy initiatives, the announcement and completion of projects and technological developments at ports. Going forward, the key to the success of Sagarmala, the umbrella programme for the port sector, lies in effective and timely project execution and fast-tracking the process related to obtaining clearances and land acquisition. Overall, growth in the sector will depend heavily on global trade cycles. Increased government support coupled with the announcement of new policies and requisite amendments to existing ones will provide an enabling environment for all stakeholders. w