Views of Gopal Krishna: “We need to develop deeper draught ports and inland waterways”

“We need to develop deeper draught ports and inland waterways”

The Ministry of Shipping (MoS) has taken a number of initiatives to step up investments in the maritime sector. The Sagarmala programme in particular is expected to be a game changer for the maritime sector, due to its focus on port-led development. At a recent India Infrastructure conference, Gopal Krishna, secretary, MoS, shared his views on the initiatives to be taken in the coming years, the need to develop inland waterways (keeping in mind the strong linkage between ports and waterways) and developments on the shipping front…

Ports – Adequate capacity at major ports, deep draught ports is the need of the hour

Ports play a vital role in the overall economic development of the country. It is imperative that infrastructure and capacity at ports continue to be augmented so as to handle the ever-increasing trade volume. The cargo handling capacity at major ports has increased manyfold in the past five-six years. The capacity has increased to 1,060 million tonnes (mt), as of March 31, 2019, which was sufficient to handle cargo traffic of 699 mt in 2018-19. A key point to note here is that while capacity utilisation levels at major ports have declined from 95 per cent during 2014-15 (over utilisation) to 66 per cent during 2018-19 (slightly under  utilised), there are no constraints in terms of handling cargo.

In light of the sufficient capacity at major ports, the MoS’s focus has now shifted to reducing the cost  of logistics by receiving larger vessels for handling containers and bulk cargo. In addition, the ministry is also focusing on developing deeper draught ports in order to handle next-generation deeper vessels. In this respect, a new western dock capable of berthing 0.2 million deadweight tonnage Capesize vessels has been proposed at Paradip port. The new dock will have a dedicated coal handling capacity of 45 mt and is expected to cost Rs 44 billion. It is scheduled to be completed by September 2023. The request for qualification bids have been invited for the project and work is expected to commence in the coming six-seven months.

A greenfield deep draught container port has also been proposed on the west coast (Vadhavan). The idea behind developing the port is to have at least one Indian container handling port among the top 10 container ports in the world. The cabinet gave in-principle approval for developing the port in February 2020. It will be developed on a landlord model and will be able to handle container vessels of 16,000-25,000 twenty-foot equivalent unit (TEU) capacity.

With a view to enhancing port governance and deregulating tariffs at major ports, the Cabinet has approved a bill to introduce the Major Port Trusts Act, 2020, that will replace the Major Port Trusts Act, 1963. The bill not only aims to enhance the efficiency levels and competitiveness of major ports but also to overhaul them structurally. One of the fundamental changes that have been introduced in the bill is with respect to determination of tariff rates for various port-related services and the terms for private developers associated with the major ports. Once the bill becomes a law, it will be curtains down for the Tariff Authority for Major Ports as every port will be governed by a port authority and will have the power to fix tariffs for a number of services. Besides, the bill aims to create a dispute resolution mechanism for private operators.

Besides introducing market-linked tariff rates at major ports to enable them to compete with the nearby state government-owned and private ports, there is also a need to reposition and monetise non-core assets at major ports. In this respect, three projects – a hi-tech city on Mumbai’s eastern water front, a satellite city including a river tourism hub at Kidderpore/ Netaji Dockyard, and an international cruise terminal in Goa, have been proposed at the ports of Mumbai, Kolkata and Mormugao respectively.

On the efficiency front, major ports have registered significant improvements in average turnaround time. India has also climbed up in the ease of doing business ranking of the World Bank (from 143 in 2017 to 80 in 2019). Meanwhile, the government is planning to migrate to full e-clearance of cargo and integrate all the export-import (exim) trade stakeholders through a National Maritime Transport Portal.

Jal Marg Vikas Project – Enhancing cargo movement through inland waterways

Inland water transport (IWT) is a cost-effective alternative to road and rail transportation. With the augmentation of traffic handled by national waterways (NWs), expansion and modernisation of the existing NWs has become crucial. The Jal Marg Vikas Project (JMVP) is a major initiative taken by the government for the development and improvement of the IWT segment. The JMVP involves the development and maintenance of fairway and key infrastructure facilities on the Ganga river from Varanasi to Haldia (1,390 km). It is being implemented at a cost of Rs 53.7 billion with technical assistance and investment support of the World Bank.

Under the JMVP, the Varanasi and Sahibganj multimodal terminals (MMTs) were inaugurated in November 2018 and September 2019 respectively. The Varanasi MMT, with a capacity of 1.26 million tonnes per annum (mtpa), was built at a construction cost of Rs 2.9 billion while the Sahibganj MMT has a capacity of 2.24 mtpa and was built at a cost of Rs 2.81 billion. Meanwhile, construction work on the Haldia MMT is currently under way and is expected to be completed soon. Upon completion, the terminal will have a capacity of 3.18 mtpa.

Further, a new navigation lock is being constructed at Farakka at a cost of Rs 3.8 billion. It is scheduled to be completed by November 2020. The two intermodal terminals (IMTs) at Kalughat and Ghazipur, with a capacity 77,000 TEUs per annum and 1.2 mtpa respectively, are also scheduled to be completed by mid-2021.

The notion behind developing NW-1 is to make it capable of handling as much cargo traffic as a small major port (for instance, like Cochin port that handled 30 mt of traffic during 2018-19). Upon completion of the JMVP, NW-1 is projected to handle around 30 mt of traffic by 2023. Another key initiative taken by the MoS to enhance trade via water-based routes is the development of the Indo-Bangladesh protocol route. The ministry aims to move cargo from NW-1 to NW-2 (Brahmaputra river) via Bangladesh’s rivers. In this regard, MMTs/ IMTs have been proposed in Assam at Dhubri, Jogighopa, Pandu (Guwahati), Silghat, Karimganj and Badarpur. Besides, a linkage has also been proposed to Sonamura (Tripura).

The MoS has also undertaken the development of the Eastern Waterway Connectivity Transport Grid project with the aim of developing inland waterway connectivity between India, Bangladesh, Bhutan, Myanmar and Nepal. Sittwe port in Myanmar has already been developed and work on a road link from Sittwe to Mizoram is currently in progress.

Shipping – India to be the global leader in ship recycling

In a significant development, the Recycling of Ships Bill, 2019, was enacted in December 2019. In addition, the government decided to accede to the Hong Kong International Convention for Safe and Environmentally Sound Recycling of Ships, 2009. The act aims to enhance domestic ship recycling capacity from 5 million gross tonnage (GT) (2018) to 9 million GT by 2024, thereby increasing the country’s share in the global recycling market from 25 per cent to 35-40 per cent.

Other initiatives that have been taken by the ministry on the shipping front include relaxation under Section 407 of the Merchant Shipping Act, 1958, for the coastal movement of exim transshipment containers and empty containers; and doing away with licensing requirements for vessels of foreign lines and foreign vessels charteded by Indian entities for the coastal movement of agricultural, horticultural, animal husbandry and fishery products and fertilisers; etc.

In sum, though the ministry has taken a plethora of initiatives to improve the overall performance of the major ports, there is a dire need for deep reforms in the port sector akin to those in the civil aviation sector.