Expertspeak: New plan needed to achieve Agenda goals

Tuticorin port recently beat its own record, handling 24,550 mt of pet coke in a single day, but we will need many more record-breakers if we have to achieve the Agenda goals. A Subbiah says splitting ports and shipping sectors will help that augmentation.

The existing capacity of all the major ports is at 616.73 mt as on 31 March 2010. Based on the feedback from user agencies and development plans, it is hoped that the Compounded Project Annual Growth (CAGR) for different commodities is likely to increase to 8.03 per cent growth by 2019-20.

This means our major ports are likely to handle about 1,214.82 mt in 2019-20. The cargo traffic through the maritime states* is projected to grow at 16.06 per cent CAGR. This means those states will handle about 1,280.13 mt in 2019-20 from the traffic of 288.80 mt. In order to meet this huge volume of traffic of about 2,495 mt, the existing capacity of 616.73 mt of major ports and 346.31 mt of non-major ports, totalling about 1,000 mt, is just not adequate and hence the capacity has to be augmented in a very big way. This building up of capacity is being planned under the public-private partnership (PPP) mode, involving private sector investment in ports. It augurs well for the private enterprise to invest in port projects.

Opportunities in the Agenda: At a macro level, clearances of projects by various authorities in time is extremely essential for implementation of projects. Although model concession documents have been put in place based on experience, litigation on tenders is an issue which may affect timely implementation of projects.

In the Maritime Agenda 2020, an investment of Rs 452,000 crore in the port and shipping sector is envisaged. It is expected that investments in the port sector amounting to about Rs 287,000 crore and investment in the shipping sector amounting to Rs 165,000 crore by 2020 is well part of the plan.

Separate sectors needed: Splitting up of port sector and shipping sector will provide focus for both sectors to concentrate on the developmental activities at implementation level. For example, the focus on the port sector shall be to create port capacity of around 3,200 mt to handle the traffic of about 2,500 mt by 2020 by implementation of various development projects, mechanisation of cargo handling and movement, development of two hub ports—one each on the west and the east coast—and shifting of transhipment of Indian containers from foreign ports to the Indian ports.

The focus on the shipping sector can be to increase the Indian tonnage through policy intervention, declaration of Coastal Shipping Policy, introduction of passenger ferry services between India and neighbouring countries, formation of independent marine casualty investigation cell, increase India’s share in global shipbuilding to five per cent from the present one per cent, and share of Indian seafarers to nine per cent from the existing seven per cent.

Transhipment as transformer: The Indian industry was incurring an additional cost towards transhipment of its products sent through containers due to lack of facilities at Indian ports to handle bigger vessels due to a variety of factors like inadequate draught, etc. The Vallarpadam transhipment terminal shall provide good connectivity for Indian exports to flow to overseas market avoiding double handling at international transhipment ports. In that way, the transaction cost of handling commodities shall come down and facilitate Indian products to compete in the world market. Since, bigger vessels can directly call at Cochin port, it will also facilitate coastal movement of containers.

Port viability: Volumes are imperative for any port system, since the tariff is structured in such a way that the higher the volumes, higher the net income of the port. Commodities like coal, POL products, iron ore and other bulk cargos and containerised cargo are the main breadwinner for any port system all over the world. That said, handling time of a vessel is of paramount importance since unduly long waiting time for getting a berth, or poor efficiency in handling resulting in occupation of a berth for a longer time will result in handling of lesser number of vessels resulting in inefficiency and sub-optimal utilisation of resources. That will have an impact on the revenues of the system.

*Gujarat, Maharashtra, Goa, Karnataka, Kerala, Pondicherry, Tamil Nadu, Andhra Pradesh, Orissa and West Bengal.

The author is Chairman, VO Chidambaranar Port, Tuticorin.