Over the past few years, competition between the major and non-major ports has escalated. The share of non-major ports in the total traffic handled at Indian ports increased from 24 per cent in 2000-01 to about 45 per cent in 2018-19. Though the decline in the major ports’ share in total cargo has prompted them to undertake performance improvement, modernisation and mechanisation initiatives via heavy investments in infrastructure, it has also driven the non-major ports to undertake more capacity expansion projects. Further, maritime states have accelerated their efforts to develop such non-major ports, largely through private participation.
The real picture
According to India Infrastructure Research, 21 greenfield non-major ports involving an investment of around Rs 960 billion have been planned. Upon completion, these ports are expected to add a capacity of over 712 million tonnes (mt). Of the 21 planned ports, nine are at preliminary/planning stage, one is at the tendering stage, project contracts have been awarded for six ports, construction works are under way on two projects and three ports are currently stalled. Meanwhile, with regard to the type of public-private partnership (PPP) format, design-build-finance-operate-transfer (DBFOT) is the preferred mode for these projects.
In general, the implementation of greenfield non-major port projects has been quite slow due to a gamut of issues. Delays in land acquisition and obtaining statutory clearances (environmental and coastal regulation zone clearances) are key among these. Construction work on a number of projects has not been able to see the light of day due to land acquisition issues. For example, even after signing the concession agreement with the Odisha government in January 2008, Subarnarekha Port Private Limited, the special purpose vehicle (SPV) incorporated for the development of Subarnarekha port, has not been able to commence construction work till now due to land acquisition issues for rail connectivity and access road to the port. Development works on ports for which concession agreements/MoUs were signed almost a decade ago are yet to take off. The concession agreement for Astaranga port was signed way back in November 2010; however, till now, construction work is yet to commence.
Indian Infrastructure provides an update on key greenfield projects…
- Astaranga port, Odisha: The port is being developed by Navayuga Engineering Company Limited (NECL). The project requires 5,596.83 acres of land, of which 1,670.1 acres is government land and the remaining 3,926.72 acres is private land. As per the latest information that is publicly available, the land acquisition process for the project is under way. Meanwhile, the Odisha state cabinet decision to incorporate a maritime board in the state to regulate non-nationalised ports is expected to expedite project implementation.
- Azhikkal port, Kerala: The port will be developed on the south bank of the Valapattanam river in Kannur district of Kerala. It requires a total of 85 acres and will be developed in a phased manner. In all, nine berths will be developed at the port, of which three will be developed in Phase I and the remaining six in Phase II. Currently, dredging works (part of Phase I) are ongoing and are expected to be completed by June 2020.
- Beypore port, Kerala: Infrastructures Kerala Limited is developing the port at a cost of Rs 1.6 billion. The scope of work involves the construction of a dedicated berth for handling cargo and passenger vessels to and from Lakshadweep, as well as development of other infrastructural facilities. In December 2018, customs officials issued a notification giving permission to the port to make use of the electronic data interchange facility at Karipur airport (Calicut international airport) for the transport of cargo from other countries. In the meantime, container shipping services at the port have commenced.
- Bhavanapadu port, Andhra Pradesh: In January 2018, the Andhra Pradesh cabinet approved the award of a contract for the development of Bhavanapadu port to Adani Ports and Special Economic Zone Limited (APSEZL), which had emerged as the sole bidder for the project. However, according to the state government, the revenue share offered by APSEZL was lower than acceptable. After negotiations, APSEZL agreed to offer a higher revenue share to the state government. As per the revised proposal, the company will now give the government 2.3 per cent of the port’s revenues for the first 30 years, 4.6 per cent for the next 10 years, and 9.2 per cent thereafter.
- Chudamani port, Odisha: To be developed for captive use, the port’s fate is unclear as the Aditya Birla Group, which had signed an MoU with the Odisha government to set up the port, backed out of the project in 2018.
- Dahej port, Gujarat: In July 2019, the Gujarat government cancelled all the approvals granted to the Sterling Group to develop the port. In addition, the state government has directed the Gujarat Maritime Board (GMB) to recover the amount that the Sterling Group had to pay as bank guarantee and repossess the 84.95 hectares given to the group for developing the port. As of January 2020, the project stands stalled.
- DevbhumiDwarka commercial port, Gujarat: Essar Ports Limited signed an MoU with GMB for developing the port during the Vibrant Gujarat Summit 2017. The port is being developed to handle bulk cargo, general cargo, and liquids, including petroleum, oil and lubricants, chemicals and liquefied petroleum gas. Meanwhile, work on the detailed project report is under way.
- Kulpi port, West Bengal: According to reports, DP World had proposed an investment in the project and its proposal had been accepted by the state government. Under this, DP World will have a 74 per cent stake in the port, while the remaining 26 per cent will be held by the West Bengal government. Meanwhile, the port may be developed as an industrial zone similar to Haldia and Kolkata ports. The project is expected to cost Rs 30 billion. However, the cost could increase by Rs 4 billion-Rs 5 billion during project implementation.
- Machilipatnam port, Andhra Pradesh: The port is being developed by NECL and an SPV – Machilipatnam Seaport Limited – has been incorporated for project implementation. The port will handle containers, bulk, dry bulk, liquid bulk, general cargo, etc. In January 2020, the Andhra Pradesh cabinet approved the project report prepared by RITES Limited.
- Nargol port, Gujarat: In July 2019, GMB cancelled Cargo Motors Private Limited’s contract for the development of the port as the company failed to complete the construction work within the prescribed time. The port was to be developed in a phased manner with three berths each in Phases I and IA.
- Ponnani port, Kerala: The project is being developed by Malabar Ports Private Limited. 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.
- Port at Kakinada, Andhra Pradesh: The port is being developed under the Sagarmalaprogramme. Kakinada Gateway Port Limited, a subsidiary of Kakinada Special Economic Zone Limited, a company promoted by GMR Infrastructure Limited, is developing the port to handle coal, general cargo and liquid cargo over the concession period of 30 years, that is extendable by another 20 years. The Andhra Pradesh government laid the foundation stone for the commercial port in January 2019. Following this, the state government signed an MoU with Haldia Petrochemicals Limited for a refinery/petrochemicals project in the Kakinada special economic zone.
- Ramayapatnam port, Andhra Pradesh: The foundation stone for the development of the greenfield port was laid in January 2019. During the same month, an MoU was signed between the Andhra Pradesh Economic Dev-elopment Board and the JSW Jaigarh Group for the construction of a jetty and slurry pipeline at the port. As per the MoU, the company will invest Rs 10 billion for the construction of the jetty in Prakasam district of Andhra Pradesh. Meanwhile, funds for the port will be raised from the income generated by the Kakinada, Gangavaram and Reva ports and the accumulated amount will be used for a period of 10 years. Further, the amount will be utilised as collateral for raising funds from banks and non-banking financial institutions. Meanwhile, financial closure for the project is likely to be achieved by June 2020.
- Rewas port, Maharashtra: In April 2019, the Maharashtra Maritime Board (MMB) rejected Reliance Logistics and Ports Private Limited’s application for extension of the “zero date” for Phase I of the port. Reliance Logistics and Ports Private Limited holds a 55 per cent stake in Rewas Port Limited, the SPV incorporated for the implementation of the project.
- Riverine port on Mahanadi river, Odisha: The port is planned to be developed in two phases. In February 2019, the expert appraisal committee (EAC) of the Ministry of Environment, Forest and Climate Change recommended the grant of terms of reference for Phase I of the project. In addition, the EAC has asked the Directorate of Ports and Inland Water Transport to submit a detailed plan for Phases I and II of the project for granting environmental clearance.
- Subarnarekha port, Odisha: Tata Steel Limited and Creative Port Development Private Limited have incorporated an SPV, Subarnarekha Port Private Limited (51:49), for developing the port. The foundation stone for the project was laid in February 2018. However, the project has been facing delays in implementation due to connectivity issues. Meanwhile, the EAC has recommended that the validity period of the environmental and coastal regulation zone clearances for Phase I of the project be extended.
- Tadadi port, Karnataka: Karnataka State Industrial Investment and Development Cor-poration Limited is implementing the project and Tadadi Port Limited is the SPV incorporated for its execution. The port has been designed to handle 34.25 million tonnes per annum (mtpa) of cargo with a final design capacity of 62.36 mtpa. No further update is available on the project.
- Tajpur port, West Bengal: Initially, the state government decided to develop the port on its own along with a private partner. But in the latter half of 2017, the state agreed to give a 74 per cent stake to the centre, which was working to develop a riverine port in South 24 Parganas’ Sagar Island. However, in January 2020, the central government stated that the West Bengal government is free to decide whether to develop the port on its own or with assistance from the centre. The port is important for the long-term viability of Kolkata port which faces draught issues throughout the year.
- Vijaydurg port, Maharashtra: To be developed in Sindhudurg district, about 150 nautical miles south of Mumbai, the port is being developed by Privilege Hi-tech Infrastructure Limited (63 per cent stake), Jupiter Capital (26 per cent stake) and MMB (11 per cent stake). Construction work on the project has not commenced as the appraisal process for environmental and coastal regulation zone clearances was delayed due to a ban on development activities along the Konkan coast a few years ago. The ban has since been lifted. No further update is available on the project.
- Vizhinjam port, Kerala: The port is being developed by AdaniVizhinjam Port Private Limited, a wholly owned subsidiary of APSEZL. The project is now expected to be completed by October 2020, instead of the earlier scheduled deadline of September 2018, owing to delays due to the devastation caused by Cyclone Okchi in November 2017.
- Yogayatan port, Maharashtra: The foundation stone for the project was laid on December 4, 2015. Reportedly, construction work on the project is expected to commence in 2020, after the monsoons.
In a nutshell
While the implementation of the proposed greenfield port projetcts has not improved remarkably, it has certainly been expedited in the past 12-14 months for at least a couple of projects. That said, there is a dire need to fasttrack the process of obtaining statutory clearances and clearing land acquisition proposals for moving the projects from the proposal/preliminary stage to the implementation stage. In addition, the lackadaisical approach of various stakeholders needs to change for ensuring timely and effective execution of port projects.