A Rising Tide

Some headway in greenfield non-major port projects

A continuous increase in cargo and heavy congestion at major ports has prompted the government to undertake the development of greenfield ports in the country. Further, over the last few years, the competition between 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 46 per cent in 2019-20.

The increasing share of non-major ports has led major ports to undertake capacity augmentation, modernisation and mechanisation, making heavy investments in infrastructure. To stay ahead in the race between major and non-major ports, the maritime states have accelerated their efforts to develop greenfield non-major ports, primarily with the support of the private sector.

Testing the waters

According to India Infrastructure Research, 18 projects worth over Rs 836 billion are under way. Of the projects in the pipeline, 10 ports entailing an investment of around Rs 495 billion have been announced or are at the preliminary stage of development, whereas contracts for five ports have been awarded (around Rs 236 billion) and three are under construction (Rs 105.52 billion).

In general, the implementation of greenfield port projects has been quite slow due to a range of issues. Land acquisition remains a major cause for concern in the development of greenfield ports in the country. A number of port projects have not been able to reach the construction stage due to delays in land acquisition. The Astaranga, Bhavanapadu and Subarnarekha ports are the prime examples of projects stuck due to land issues. Opposition and backlash from local communities, especially the fishermen, has also delayed the implementation of port projects. Hence, port developers need to prepare a comprehensive coastal zone management plan to prevent implementation delays.

Similarly, a reason behind the delays in construction works on the international transshipment terminal at Vizhinjam has been the protest from locals. Besides, greenfield ports are usually situated in remote locations and considerable government-level support is required to create basic infrastructure for site access. This leads to a longer gestation period and the financial viability of port projects becomes a key deterrent for private developers and financiers.

Indian Infrastructure provides an update on the key greenfield port projects…

  • Astaranga port, Odisha: Being developed by Navayuga Engineering Company Limited (NECL), the port will have a capacity of 17.7 million tonnes per annum (mtpa) in its initial phase, which will be eventually scaled up to 70 mtpa. The expert appraisal committee (EAC) of the Ministry of Environment, Forest and Climate Change (MoEFCC) granted fresh terms of reference (ToR) for the port in May 2020. Currently, the project is facing roadblocks in its implementation due to land acquisition issues, and it has been put on hold due to legal constraints.
  • Azhikkal port, Kerala: The port is located at the south bank of the Valapattanam river in Kannur district, Kerala. Construction work on the port is under way and is expected to be completed by June 2021.
  • Beypore port, Kerala: The scope of work of the project, being developed by INKEL Limited, includes the construction of a dedicated berth for handling cargo and passenger vessel movement to and from Lakshadweep, and the development of other infrastructure facilities. Container shipping operations have commenced at the port. In November 2020, the port authorities sought the support of customs officials and the Cochin Port Steamer Agents Association for the development of the port.
  • Bhavanapadu Port, Andhra Pradesh: The ToR for the development of the all-weather port was granted by the MoEFCC in May 2016. However, the project has not been able to take off since then. The Andhra Pradesh cabinet approved the award of the contract to Adani Ports and Special Economic Zone Limited (APSEZL) in January 2018, but it walked out of the project in April 2020, citing land acquisition issues.
  • Chudamani port, Odisha: To be developed on a build-own-operate basis as a captive port, the project’s fate still remains uncertain as the Aditya Birla Group, which had signed an MoU with the state government to set up the port in October 2009, backed out of its decision. No further update is available on the project.
  • 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 the Sterling Group had to pay as bank guarantees and also to take repossession of the 84.95 hectares of land allocated to the group.
  • Devbhumi Dwarka commercial port, Gujarat: The port is being developed to handle multiple kinds of cargo including bulk cargo, general cargo, and liquid cargo including petroleum and oil lubricants, chemicals and liquefied petroleum gas. Currently, the detailed project report (DPR) for the port is being prepared.
  • Kulpi port, West Bengal: The West Bengal government approved the revival of the port in March 2019. According to reports, DP World proposed to invest in the project for a 74 per cent stake, while the remaining 26 per cent stake will be held by the West Bengal government. No further update is available.
  • Machilipatnam port, Andhra Pradesh: To be set up in Krishna district of Andhra Pradesh, the port will be developed by NECL on a build-own-operate and transfer basis. In November 2020, the Andhra Pradesh cabinet approved the new DPR for Phase I of the port. Following this, in February 2021, the EAC recommended the grant of ToR for the development of Phase I of the port at an estimated cost of Rs 58.35 billion. Meanwhile, a project management consultancy contract worth Rs 620 million was awarded to RITES Limited in December 2020.
  • Nargol port, Gujarat: The port will be developed in a phased manner. It involves the construction of three berths in Phase I and six berths in Phase IA. In July 2019, GMB cancelled the contract of Cargo Motors Private Limited for the development of the port as the company failed to complete the construction work within the prescribed time. The state government is now expected to invite fresh bids for the project.
  • Ponnani port, Kerala: The port’s contract was awarded to Malabar Ports Private Limited in January 2011. Reclamation work on the project commenced in 2015 and was scheduled to be completed by December 2018. However, the work reportedly came to a halt due to reasons not stated. No further update is available.
  • Port at Kakinada, Andhra Pradesh: The state government laid the foundation stone for a greenfield commercial port at Kakinada in January 2019. Following this, the state government signed an MoU with Haldia Petrochemicals for a refinery/petrochemical project in the Kakinada special economic zone. APSEZL is expected to buy the under-construction port project.
  • Ramayapatnam port, Andhra Pradesh: The Andhra Pradesh Maritime Infrastructure Development Corporation will develop the port in Prakasam district of Andhra Pradesh. The proposed port is expected to handle granite blocks, container traffic and agricultural products as major exports, and coal, fertilisers and edible oils as major imports. Recently, in February 2021, the EAC of the MoEFCC recommended the grant of amendment in the ToR for the development of the port at a revised cost of Rs 37.36 billion (Phase I).
  • Rewas port, Maharashtra: The port will be developed in phases, with Phase I involving the development of nine berths. In April 2019, the Maharashtra Maritime Board (MMB) rejected the application submitted by Reliance Logistics and Ports Private Limited for the extension of “zero date” for Phase I of the port. No further updates are available.
  • Riverine port on river Mahanadi, Odisha: The Ministry of Ports, Shipping and Waterways (MoPSW) has given its approval to the Paradip Port Trust (PPT) to sign an MoU with the Odisha government for the development of the greenfield port. In December 2020, a PPT delegation visited the proposed site of the port ahead of the signing of the MoU. The port is being developed in phases. The overall cost and capacity stands at Rs 40.62 billion and 54 mtpa respectively. As of December 2020, 22 mtpa of capacity will be developed at a cost of Rs 25.62 billion under Phase I of the project.
  • Subarnarekha port, Odisha: The project involves the construction of a greenfield deep water port at the mouth of the Subarnarekha river in Balasore district of Odisha. It will have a concession period of 34 years including four years for construction, with an additional period of 20 years in two blocks of 10 years each. The port has been facing roadblocks in its implementation due to land acquisition issues and has been put on hold due to legal constraints. Overall, of the 965 acres of total land required, the state government has handed over 692 acres for the project and the Balasore District Administration is in the process of acquiring the remaining land.
  • Tadadi port, Karnataka: The project is being implemented by the Karnataka State Industrial Investment and Development Corporation. A special purpose vehicle, namely, Tadadi Port Limited, was incorporated for project execution. Since the developer has not submitted the state forest clearance since 2016, the MoEFCC approved the delisting of the project in May 2020.
  • Tajpur port, West Bengal: To be developed in two phases, the project does not require any land acquisition and will be built on reclaimed land. The West Bengal Maritime Board invited expressions of interest for the development, operations and maintenance of the port in December 2020. The last date for the submission of bids has been extended from February 19, 2021 to March 19, 2021. The project will be implemented in two phases, with Phase I involving the construction of six berths and dredging to create an 18.5 km long shipping channel while Phase II involves the construction of the remaining three berths.
  • Vijaydurg port, Maharashtra: To be developed in two phases with a cumulative capacity of 75 mtpa, the port will be developed by Privilege Hi-Tech Infrastructure Limited (63 per cent stake), HIPE Transport Infrastructure Ventures Private Limited (26 per cent stake) and MMB (11 per cent stake). Construction work for the project could not be commenced as the appraisal process for environmental and coastal regulation zone clearances was delayed due to a ban imposed on development activities along the Konkan region a few years back. The ban has now been lifted.
  • Vizhinjam port, Kerala: One of the ambitious projects of the Kerala government, the Vizhinjam international transshipment deep water multipurpose seaport is designed primarily to cater to container transshipment besides multipurpose and break bulk cargo. The port is being developed by Adani Vizhinjam Port Private Limited on a design-build-finance-operate and transfer basis. Work on the project has been affected due to the ongoing pandemic and protests by local residents. Meanwhile, the MoPSW is prioritising the port in order to increase the share of Indian cargo transshipped at local ports from about 25 per cent to over 75 per cent by 2030.
  • Yogayatan port, Maharashtra: The Yogayatan Group is developing the port in Thane creek near Mankhurd, Maharashtra. The foundation stone for the project was laid on December 4, 2015.

The road ahead

While the implementation of greenfield port projects has not been satisfactory, it has certainly improved in the past couple of years. That said, there is a need to expedite the process of obtaining the requisite approvals and completing the land acquisition process to move the projects from the preliminary stage to the construction stage. There is also a need for stakeholders to adopt a more proactive approach to ensure the timely and effective execution of projects.

In a nutshell, the pace of development of new ports needs to be accelerated to achieve the government’s ambitious target of over 3,500 mtpa of port capacity by 2035. This requires effective coordination between the different levels of the government and the stakeholders.

Garima Arora

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