The port sector has undergone a paradigm shift in the past few decades. Earlier, ports used to be under the strict control of the government. Since liberalisation, private participation has increased in the sector. The contribution of ports to the economy has increased, helping boost external trade. At a recent India Infrastructure conference, Lt Commander B.M. Ravindranath Reddy, deputy chief executive officer, Andhra Pradesh Maritime Board (APMB), talked about the upcoming greenfield ports and investment opportunities in the state, and the key issues and challenges being faced. Excerpts from his speech…
Key trends
The world over, there is a paradigm shift taking place in the port sector, especially in India. India is aspiring to be a leader in the maritime sector and is taking several steps in that direction. In the past, ports used to be large projects, and were few and far between. In the changing scenario, states are building many different types of ports such as captive berths, specialised oil terminals, single-point moorings (SPMs), and lighterage ports. The sector is witnessing increasing private participation in collaboration with the coastal states. These private ports are starting to outperform major ports. With the states realising the potential of ports to influence their economy, they are keen to invest in bigger port complexes and operate them. Thus, future development in the sector will be undertaken mainly by the states, as they may not prefer the centre’s role in developing large ports in their state. This makes it important that the state maritime boards are actively engaged in forming the shipping and maritime development policy.
The number of ports has increased, while the distance between them has decreased. Therefore, there is more stress on the quality of service at the ports and the migration of cargo from other means of transport to sea transport. In this activity too, the minor ports operated by the state maritime boards are playing a leading role.
Andhra Pradesh has the second longest coastline in India, spanning 974 km. Of the 26 districts of Andhra Pradesh, 13 are coastal. The Andhra Pradesh coast has the great advantage of deeper depths of 20 metres available within 2-4 km of the shore in many locations, which can be used for all kinds of marine activities. Thus, the dredging requirements are lower in the state, reducing the overall operational costs of ports. At present, there are five operational state ports in Andhra Pradesh: Krishnapatnam deepwater port, Kakinada anchorage port, Kakinada deepwater port, Gangavaram deepwater port and the captive port in Ravva. The Ravva captive port supports the offshore facilities in the KG Basin.
Traditionally, demand for a port has been driven by the presence of existing industries, generating significant cargo that needs to be transported to and from these industries. Post its bifurcation, Andhra Pradesh was left to be an agrarian state, as an overwhelming majority of industries in the erstwhile combined state were located in and around the city of Hyderabad. In the normal course, it would take a prolonged period for the state to become industrialised at par with other states. Therefore, instead of waiting for industries to be set up and grow organically, the state took a bold initiative to build three new greenfield ports and leverage the advantage of a port in reducing logistics costs and thus encourage industrialisation. To this end, the maritime board of the state has acquired large areas of land, ranging up to 10,000 acres, near its ports for allotment to industries. This port proximate area is dedicated to port-based industries and services, which can synchronise with and leverage the port infrastructure. This offers an excellent opportunity for new businesses that are cargo intensive to establish their facilities in these areas.
APMB believes that a port is not just its berths; it should be an industrial complex in itself. APMB has embarked on a mission to create such complexes in all of its ports.
Upcoming greenfield ports
The Andhra Pradesh government is developing three greenfield ports — Mulapeta port in the north, Machilipatnam port in the centre and Ramayapatnam port in the south of its coast. These ports are being built by the maritime board under the landlord model. Another greenfield port, Kakinada special economic zone (SEZ) port, is being developed under the public-private partnership model. These are all deep draft ports. At present, the average draft in the country is about 13 metres. However, all the ports in Andhra Pradesh have above 15 metres draft and some are going to have over 17 metres. This will enable larger vessels to call at these ports and thus reduce the shipping costs through these ports.
Investment opportunities
Port-led industrialisation is a key focus area for APMB. With eight deepwater ports along its coast, Andhra Pradesh has the highest density of ports per km of coastline. As mentioned earlier, each of these ports comes with a proposed industrial development area. In addition, the state has an abundant land bank in the proximity of all ports, which can be allotted to mega industries.
Free trade warehousing zones with state-of-the-art storage and warehousing infrastructure can be developed in Andhra Pradesh at strategic locations, for long-term warehousing and value addition for domestic and international markets. Moreover, a ship recycling facility with zero impact on the environment, complying with international recycling regulations, can be set up on the coast of Andhra Pradesh to recycle end-of-life vessels. This can facilitate the production of green steel and the development of downstream industrial clusters engaged in further processing of this steel. Currently, APMB at in an advanced stage of discussions with many stakeholders regarding ship recycling facilities.
Additionally, a hub for petrochemicals and liquefied natural gas can be created in port-proximal areas of the state to cater to the requirements of the entire Bay of Bengal coast, which not only includes Indian states but also countries such as Myanmar, Bangladesh, Malaysia and Thailand. Such a hub would facilitate the growth of the petrochemical industry and its supply chain. It would also help reduce lead time and trucking time. Most of the country’s refining capacity is based on the west coast. Not many facilities are present on the east coast. This offers a great opportunity for setting up petrochemical complexes.
The state has immense scope for coastal shipping of cargo, roll-on/roll-off (ro-ro) and roll-on/roll-off passenger (ro-pax) services. The development of coastal terminals/shallow water berths can facilitate the migration of cargo movement from roadways to water transportation along the coast. Minor coastal infrastructure is being created in the state through the construction of nine fishing harbours, each with a draft of 3.5 metres. They can also be used as coastal berths. Additionally, aqua processing is being encouraged. Fisheries and aquaculture provide investment opportunities in deep sea fishing, seafood processing, cold storage, cold chain logistics, retail infrastructure, fish meal plants, ice plants and fishing equipment.
All of APMB’s ports are well connected via more than one mode of transport. This provides an opportunity for the development of multimodal logistics parks, inland container depots, cold chains and other logistics infrastructure. Further, picturesque and scenic locations on the coast of Andhra Pradesh can be utilised for the development of high-end, eco-friendly hospitality projects, with scope for water sports and other marine tourism activities.
The ports of Andhra Pradesh can become the torchbearers of green energy by installing projects utilising solar energy, wind energy, wave energy, tidal energy and green hydrogen. There is scope for the development of an incubation centre for start-ups engaged in research and development regarding the production, storage and transportation of green energy.
Key issues and challenges
One of the major challenges is that funding institutions tend to consider existing traffic as a major yardstick for financing. However, the induced traffic due to the creation of a port is often given less significance. Other key issues are delays in obtaining environmental clearances and acquiring land. Thus, there is a need for the rationalisation of procedures and processes involved in obtaining environmental clearances.
