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Expertspeak: The case of the missing treasure map

Expertspeak: The case of the missing treasure map

Has the map gone missing? The targets that the MA 2020 has set are aggressive, but a sense of realism does not set in when a commendable effort to define the 'what' is not followed by a systematic 'how-to'. Soumendra Nath Ray writes.

The masterplan is missing from the Maritime Agenda 2020 (MA 2020). We already have the Results Framework Document (RFD) from the Ministry of Shipping. Now, for the first time, the Ministry has come out with a paper and a road map. The question is, how do these two connect?

On the one hand, we have the intent, complete with all numbers and analysis, down to the details of what kind of projects have been envisioned-even at small ports. On the other hand, there is a document that tries to measure the success of the initiatives at a much broader level. The RFD has per­formance metrics for other departments like the Planning Commission, the Ministry of Railways, etc. Yet, the roadmap in MA 2020 does not give me an idea of how these metrics will be achieved. A clear picture of the execution framework (Assess [ Plan [ Execute [ Measure) is conspicuously missing from the Agenda.

Simplify the web: The targets in the Agenda are aggressive. Indeed, such aggre­ssive targets are required for the country to turn into a global trading powerhouse. But a sense of realism has to be brought in while fixing targets.

A port is not a stan­dalone infrastructure segment, but rather, it is a transit point between two modes of trans­port of land and sea. It is an ecosystem of growth in itself. A wholesome nature of this eco­system needs to be simultaneously dev­eloped. Any hiccups in the land-side of the maritime projects will affect the target achievement of the Agenda 2020. New port projects depend on industrialisation plans of the immediate hinterland.

There are many components to the wholesome development of this ecosystem. These would include legislations and port regulations, environmental policies, con­nectivity, tariff, hinterland industria­li­sa­tion, supporting infrastructure, human res­ource development, usage of ICT, tax regimes, financial support and a national port authority.

A large number of stake­holders are involved in the network of marine infrastructure. Any effort to bring in changes would be thwarted if it is not accompanied by simplifying the web of stakeholder inter-relationships.

Private participants in ports are a cri­tical piece of the stakeholder pie. The mo­des of granting upgradation and greenfield PPP projects are usually revenue shares and minimum bid prices. We have observed that either the minimum bid prices for upgradation projects are usually on the higher side than market value, or the revenue shares promised to the government bodies is too high to allow profitability in the initial years. A private participant in ports would like to see benefits and profits accruing to it in the near term so that it has a reasonable Debt Service Coverage Ratio (DSCR).

Many PPP projects do not take off successfully as the funding agencies require a break-even within seven to 10 years of the project's award. Due to the aggressive nature of the targets and lack of suitable supporting infrastructure in the vicinity, the projects take longer than that time to reach break-even. This inevitably results in extensive delays in financial closure of the PPP projects.

Divide and rule: Splitting up of ports and shipping sectors is helpful in under­standing the government's pers­pective of the decadal plan. It is necessary to bring a split that is mutually reinforcing. In the current Maritime Agenda, shipbuilding activities, which are capital projects, have been clubbed along with shipping, which is an ongoing trade operations activity. This is potentially misleading. Ship break­ing is an important labour intensive trade in Bangladesh, and that can be the case in India, too. Clubbing ship-building and breaking activities can lead to inadequate focus in such areas.

Managing a port is a delicate balancing act. Ports form a series of links in the supply chain. Any bottleneck in any of the ope­rating factors, be it in road transportation, quay crane failure, accidents in the loading bay, power shortages and waiting times can result in losses worth crores of rupees.

Given India's growth story, it is difficult to see how much-needed ports can be making losses. Perhaps professional management and a coherent national agenda are all that is required to bring in the efficiencies that will help make our ports profitable.

The author is a Senior Consultant, leading strategy and management consultancy projects at Navi Mumbai-based i-Maritime Consultancy.

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