Home » Dighi Port to invest upto Rs 18 bn to develop infrastructure

Dighi Port to invest upto Rs 18 bn to develop infrastructure

Dighi Port to invest upto Rs 18 bn to develop infrastructure

Dighi Port, the first and the largest greenfield port of Maharashtra, is located at a distance of 42 nautical miles (NM) from Mumbai Port and 170 km south of Mumbai by road. It is being developed as a multipurpose, multi-cargo, all-weather port with deep draught, direct berthing facilities and modern cargo handling equipments with adequate stack yards and warehousing facilities, back up areas with an ample land bank of approximately 1,500 acre.

Vijay Kalantri, Chairman & Managing Director of Dighi Port, in response to queries raised by Raja Iyer, said the port plans to make a total investment of Rs 1,500 to Rs 1,800 crore to set up new berths and create backup infrastructure in the coming months.

“We at Dighi Port look at the overall logistic solution for our port users and try to reduce the cost across the entire supply chain rather than just by reducing our port tariff. We firmly believe that our competitive advantage lies in efficient operations and faster turnaround of the vessels at the port thus ensuring high levels of customer satisfaction.”

The future business of the port largely depends on the multi-product Special Economic Zone (SEZ) being set up in the neighbouring area. Can you brief us the progress of the SEZ project.
The Special Economic Zone (SEZ) and Free Trade Warehousing Zone (FTWZ) is not being set up in the neighbouring area but is being set up inside the port. A port based multi-product Special Economic Zone (SEZ) is being developed at Dighi Port for the purpose of facilitating the setting up of manufacturing units, provisioning of services and other activities including processing, assembling, repairing and reconditioning.

Dighi Port Ltd has all the requisite regulatory permissions and licenses in place for the development of the SEZ. A total of 250 acre of land to start with has been earmarked for the development of the port based SEZ, which will be increased in a phased manner to upto 2,000 acre, making it one of the largest port based SEZ in Maharashtra.

Along with the SEZ, a FTWZ is also planned at Dighi Port which will provide dedicated or general purpose world-class infrastructure for industrial units, warehousing of various products, state-of-the art equipment, transportation and handling facilities, commercial office-space, water, power, communication and connectivity, with one-stop clearance for import and export to support this integrated zone as “international trading and transshipment hub”.

The SEZ and the FTWZ at Dighi should be ready by the third quarter of 2014.

What is your expectation of total cargo volume in 2013-14? What are the main cargoes that the port aims to handle in the ongoing financial year?
The port has been handling regular shipments of steel, bauxite and coal. Apart from these cargo types, the port is also likely to start handling foodgrains this year. Furthermore, the liquid cargo terminal at the port should be ready by the end of this year and the port shall be handling hydrocarbons and other liquid cargo by early next year.

The port is also likely to start handling shipments of gypsum as well as steel slabs and scrap in the year. Our estimated target volume for the year 2013 -14 is 3 to 3.5 million metric tonne.

Given that JNPT, the largest container port in the country, is located near the port, how do you overcome competition from the port?
There is no question of competition with JNPT as they are already running over 100 percent capacity. India needs more ports to be developed as the cargo volumes are increasing and the already established ports are all operating over capacity.

Further the EXIM trade is looking for ports that offer better infrastructure as well as higher levels of operational efficiency. Newer ports are now offering deeper drafts so as to accommodate the new generation of vessels which in turn provide the shippers with economies of scale. Further, the higher level of operational efficiencies due to modern equipment ensures faster turnaround of the vessels. As per the E&Y Report, 2011, it can be seen that the minor GMB ports have seen a 12.4 percent year on year growth. This is due to congestion at major ports such as JNPT, Mumbai and Kandla which has resulted in the cargo from the major ports being diverted to minor ports.

Ports generally attract majority of the cargo from industries located in their primary hinterland. Most of the major ports have been in operation for almost 100 years and have all the facilities in place especially with regard to connectivity and as a result they are able to handle cargo generating from areas other than their primary hinterland. Due to this, most of the major ports in the country are working at 100 percent capacity and some of them even above 100 percent. In 2011-12, JNPT operated at nearly 120 percent of its capacity. This capacity constraint at JNPT has benefitted private ports like Mundra and Pipavav in Gujarat, which are operating at around 60 to 70 percent of their capacity. This in turn is leading to congestion at these ports and high waiting time for vessels which is increasing the total cost of the shipment. As a result of the capacity constraints being faced by major ports, cargo is being diverted to the private ports due to their locational advantages, higher efficiency and overall better service.

Lastly, JNPT is predominantly a container port and has limited capacity when it comes to handling dry and liquid bulk and break-bulk cargo. Dighi Port on the other hand is being developed as an all weather, deep draft, direct berthing port which is capable of providing dedicated facilities for handling all types of cargo such as dry bulk, break û bulk, liquid, containers, Ro-Ro and LNG cargo. Also, Dighi Port caters to the industrial areas in and around the port such as Poona, Kohlapur, Solapur, Nashik, Vile Bhagad, Mahad and destinations in Madhya Pradesh.

The port plans to add container, liquid, LNG, RO-RO and multipurpose berths in future. Can you give us the proposed investment, timeline for these projects?
Currently, three multi-purpose berths are under construction and these three berths will have a total quay length of 1,100 km and a width of 35 m each. As these berths are multi-purpose berths they are capable of handling bulk, break-bulk, containers as well as RO-RO cargo. These berths are likely to be ready by the second quarter of 2014.

With regard to liquid cargo, Dighi Port Ltd has entered into a Joint Venture Agreement with IMC, one of country's largest liquid operators. The joint venture company is in the process of constructing tanks at present and will initially offer a storage capacity of 100,000 KLs, which will be increased in a phased manner depending on the demand. The liquid facility at the port will be ready by end of this year. Total investment in the berths as well as in the backup infrastructure will be approximately Rs 1,500 to Rs. 1,800 crore.

Dighi Port is also the only port in Maharashtra after Dhabol to have all the requisite permissions and approvals in pace for setting up a LNG facility. The port is only at a distance of 22 km from the main GAIL pipeline of the country. The port has close to 5 km of waterfront (both banks put together) as well as 1,600 acre of land, a part of which has been earmarked for the setting up of a dedicated LNG facility. The tranquil and calm waters of the Dighi harbour make it an ideal location for setting up of a LNG facility.

Can you brief us how the port performs in terms of efficiency parameters like average turnaround of ships, average berthing time for vessels etc.
On the berths that are currently operational, Dighi Port has deployed 2 multi-purpose mobile harbour Gottwald cranes which have a rated handling capacity of 1,000 mn t per hour. These cranes are highly efficient and with an experienced operations team, the port has been able to achieve an average discharge rate of 800 mn t per hour on the two gearless coal vessels that the port has handled recently.

Further, the port has a dedicated channel and due to its high efficiency in operations, it is able to turnaround a 70,000 DWT vessel in 2 days, which is better than the turnaround time being achieved at most ports. This fast turnaround of the vessels calling the port ensures that there is no waiting time for vessels wanting to berth at the port.

What are the incentives you expect from Maharashtra government for the future growth of the port?
Dighi Port has signed a 50 year “Build, Own, Operate, Share, Transfer (BOOST)” Concession Agreement with Maharashtra Maritime Board (MMB). Some of the areas where support from the Maharashtra Government would be welcome are as follows:

  • Land acquisition process needs to be simplified and also the government should be involved in the process of land acquisition so as to speed and ease up the process as land is require for the development of support infrastructure in and around the port.
  • Connectivity is another area where government intervention is a must. Most minor ports in the country are being developed in areas where connectivity is extremely poor. There is no adequate road connectivity and rail connectivity is non- existent in these areas. The government needs to realize the importance of connectivity to a port and needs to develop the same. Roads need to be wide and atleast have 2 lanes for movement of cargo to and fro from the port. Further the roads should be in a position to take the load of numerous trucks carrying cargo on a daily basis.
  • Rail connectivity is also a must as it is more economical and certain cargo types such as fertilizers, food grains etc move only by rail. The government needs to help the ports in order to ensure that the ports are connected to the national railway grid of the country so that there can be smooth flow of cargo to and fro from the ports to all over the country.
  • Dredging is another area where government support is required. The cost of dredging in the country is extremely high and the government needs to find ways to support the ports so that dredging activity can be carried out at most ports in an economical manner. Most ports in India cannot accommodate the new generation of vessels due to draft restrictions and if Indian ports need to compete with ports worldwide then they need to offer deeper drafts.

How do you thing the development of the Delhi Mumbai Industrial Corridor would benefit the growth of the port?
Dighi Port is the last node of the Delhi Mumbai Industrial Corridor (DMIC), which is being developed jointly by the Indian government and Japanese government. Industrial clusters comprising of automobile, chemicals, steel, agriculture, power, project equipment manufacturers are being set up all along the DMIC, making it a manufacturing and trading hub for all types of industry resulting in increase import and export volumes in the region. Dighi Port being a part of the DMIC and in close proximity to the industrial clusters being developed in ports hinterland will play a crucial role in providing these industries with world class port infrastructure and facilities.

Apart from the DMIC, the Dighi Port Area recently has been identified as a one of the 7 Mega National Investment and Manufacturing Zones (NIMZ) under Government of India's new Manufacturing Policy. A total area of 230 sq km has been allocated for the development of the Manufacturing Zone in the Dighi Port Area.

The NIMZ's will entail an investment of $5 billion and will include support infrastructure and services like multi-modal logistic hubs, container freight stations (CFS), inland container depots (ICDs), warehousing, cold storages, cargo distribution etc which will result in generation of more cargo from the region thus increasing the importance of the port to the EXIM trade.

What are the steps the management is taking to boost rail, road connectivity to the port?

Connectivity is the lifeline to any port project. Without proper connectivity, the best planned port in the world is also of no use.

Further, port connectivity is a significant component of port capacity development because when port capacity development is planned, connectivity plays an equally important part. Without evacuation, the capacity cannot really be utilized. Both road and rail connectivity and critical for the success of a port and we at Dighi Port are aware of the important role that connectivity plays in the success of a port. It is essential that the port has proper rail and road connectivity in order for it to survive.

Both banks of Dighi Port are connected by the State Highways to the National Highway 17, which is 45 km from the port. The nearest Konkan Railway Rail Head Indapur – Mangaon is 47 km from the port.

Road

Both banks of the port are connected to the National Highway NH 17 via 4 State Highways. The North Bank is connected to National Highway via State Highways (SH) 92, 96 and the South Bank is connected to National Highway via SH 97 and 98. Land for 2 laning of roads with paved shoulder is available across all State Highways effectively giving a 4 lane facility service to the port.

Rail

Dighi Port Limited has received an approval from Ministry of Railways (MoR) to develop the railway siding at the port under the 'Private Rail Siding (PRS)' model. The port will be connected to the nearest Konkan Railway Head Indapur û Mangaon, which is at a distance of 47 km. Land acquisition is currently in progress and the port should have rail connectivity by end 2015.

Last mile connectivity is the key and future for ports in India. Ports need to provide customers with an end to end solution. All services with regards to transportation of customer's cargo from the port to the point of delivery at the customer's factory or vice versa need to be offered by ports under one logistic umbrella.

The central government expects Rs 180,626 crore investments in major and non-major ports during 2012-17. What are the impediments in India's port sector that must be overcome to achieve this target?
While India's ports sector has the potential for significant progress in future, certain challenges may impede its journey to growth. Both the Centre and the States should address such challenges to facilitate sector growth.

  • Enhancing port infrastructure: Increased emphasis on upgrading both, seaside and landside infrastructure to enhance draft and evacuation procedures would enable universal smoother cargo flows from larger vessels. Improved level of mechanization via upgrading material-handling equipments and enhanced proper IT infrastructure should be build to ensure electronic flow of information among various stakeholders.
  • Improve capacity utilization: For ports that are potentially limited by the hinterland, the focus needs to be on operational efficiency, which can help such ports remain competitive vis-a-vis larger ports and have a compelling proposition for customers. This would also enable them to remain profitable at low traffic volumes.
  • Environmental Clearances: Easing and speeding up the process of getting environmental clearances for upcoming port projects. The introduction of single-window clearance procedures at the central and state government level would encourage Greenfield projects, thereby reducing long gestation periods.
  • Railway Capacity creation: In addition to the planned Western and Eastern Dedicated Freight Corridor (DFCs), there is a need to create adequate freight- carrying capacity within the Indian rail network. The Indian Railways also needs to establish and improve connectivity with ports and road networks to form an inclusive intermodal strategy for first- and last-mile connectivity.
  • National Highways Development Programme (NHDP): The completion of the National Highways Development Programme (NHDP), which is aimed at developing 50,000 km of National Highways by 2015 in seven phases and modernization of the road cargo transport, will lead to faster and efficient movement of cargo from the ports.
  • Higher investments, private sector participation and stringent regulations are key drivers that would lead to the development of world-class ports in India. In parallel, development of hinterland connectivity options, enhancing levels of IT, and facilitating quality manpower training would drive operational efficiency of Indian ports.

Major ports complain that the regulation of tariffs by TAMP makes it difficult for them to compete with minor ports. Consequently, the government is taking some steps to liberalize tariff regulation in major ports. Do you think this would reduce the competitive advantage of minor ports like yours?
No not at all. However, once the government liberalises TAMP, it will ensure that major ports will have the same level playing field as minor ports as far as tariff fixations is concerned. However that being said, tariff and pricing are one of the factors but not the primary factors for a port to have competitive advantage over other ports. Critical success factors such as port connectivity, deeper drafts to accommodate larger vessels and operational efficiency to ensure quick turnaround of vessels are far more important for a port to be successful.

Providing the trade with the above will ensure that the port will be far more economical as compared to just reduction in port tariff.

We at Dighi Port look at the overall logistic solution for our port users and try to reduce the cost across the entire supply chain rather than just by reducing our port tariff. We firmly believe that our competitive advantage lies in efficient operations and faster turnaround of the vessels at the port thus ensuring high levels of customer satisfaction.

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