Multimode transport is yet to be a reality in India. There are no dedicated corridors that connect ports with Indian rail or inland waterways. That needs to shape up, suggests Kumar Ankit, Treasurer, Indian Private Ports & Terminals Association (IPPTA).
How developed is the ports infrastructure in India? What are the significant challenges? India has 12 major ports and approximately 200-plus minor ports with varied capacities. The capacity utilisation is around 50-55 per cent, though the government this to be about 60 per cent. The critical difference between the government side and the operative side is occupancy vs. efficiency. Presently, what is valued is the occupancy of port premises and not their efficiency.
The turnaround time for a Capesize vessel is typically 36 to 48 hours in Singapore and Dubai whereas in India it is nearly eight days. The critical challenge is how to get efficiency? I believe the moment investments are linked to efficiency things will start improving. We have the Tariff Authority of Major Ports (TAMP), which is doing a good job, but on the other hand, many minor ports don't have any such regulator. The focus of TAMP is limited to major ports and that too to private ports. The tariff fixation is done, but there is no incentive given to port operators for working efficiently neither by the TAMP or by the ports. That is why efficiency is still not a factor under consideration by the port operators.
Another bottleneck is on the logistics side. Multimode transport is yet to be a reality in India. There are no dedicated corridors that connect ports with Indian rail or inland waterways. That needs to shape up. In India, currently, the overall cost of logistics in the GDP is around 14 per cent whereas it is approximately 8 to 9 per cent for other developed countries or international benchmark. Then comes the hinterland connectivity issue. At present, the hinterlands are connected with either road or rail and not through an inland waterways network. Non-availability of rail rakes is yet another issue: it is higher in the eastern and northern zones. The southern zone has a lesser density of rakes. Comparatively, the south zone has more top-quality roads.
We have the east as well as the west coast. On the east coast, the hinterland is Chhattisgarh and Madhya Pradesh that are landlocked states. To address all these is to develop a multi-modal transport system that makes evacuation faster. This calls for more efficient coordination between the multiple ministries.
India has laid the foundation for multi-modal logistics and transport systems, but nothing is visible as of now! Could you highlight the possible causes of the delay? No, I think the government is doing a great job as the golden corridor project is coming through. But the issue is that the entire detailed project report (DPR) was done, let's say, in 2010. However, by the time the project is implemented, it is already 2020. This is a serious concern. Now, the DPR had taken into consideration the speculation on the economy growing at 8 per cent, but the project is only launching now and will finally take shape in 2025. This is a fundamental problem in infrastructure projects. If you are doing a DPR for roadways to be developed we do a count for the number of conventional vehicles transiting in that area. The counting is done in 2010 with a presumed benefit going till 2030. Still, the road infrastructure is on stream only in 2025. There is a huge gap between the DPR and the actual implementation.
The inter-ministerial issue is not about one sector alone, it seems! No, most sectors face the issue. There is an allocation of Rs 1 trillion for the ports sector and they said it would be realised through asset monetisation. We will wait to see what will happen in the next 25 years. The focus is only on the 12 major ports, and the remaining 200 minor ports are still in the picture. Although multiple industries and ministries are dealing with the same subject, they don't seem to be going anywhere. For example, Andhra Pradesh right now manages 30-35 minor ports, but do we need those many minor ports? None of them has more than 20-25 per cent capacity utilisation, which is a loss. No one is investing from their pocket and the funds are borrowed from public sector banks. Sooner or later these will turn into non-performing assets (NPA)s. A recent example is the case of DSA. The Singapore-based company is very successfully operating in Singapore but was almost on the verge of bankruptcy in India. Same company, same management, same harbour profile, but what is different? Two critical points from the operations perspective: -evacuation delays and lack of technology. We are at a very basic level of technology.
But some of the companies have integrated technologies like the tracking system? CONCOR has a 40 per cent market share, they still don't have it. MAERSK is the only one who did it, but it is work in progress. Technology is going to be a significant factor. In my opinion, two or three things need to be taken care of from a policy intervention perspective. Firstly, they need to promote efficiency, not occupancy. Efficiency can be improved by giving incentives to private players. This will result in better logistics management both inward and outward. We need circular economy ships. Secondly, creating a zone within the country to provide all logistics solutions for that area. I don't think that had worked or saw the light of the day.
List the three benefits and disadvantages of the asset minimisation of ports. From the monetisation perspective, all the major ports right now have a good amount of land assets and seafront for servicing the port users. But except for the private players, the government companies are not going to invest in those plants. The private players via the PPP model would most probably be interested, but the overall success of the PPP model is something that the government needs to look into. Look at the number of litigations PPP enters into for the implementation of projects. In a majority of cases, what happens is in spite of having signed for the concession agreement the project never takes off because the statutory clearance was never obtained. With monetisation, of course, efficiency still has to be maintained. The monetisation of assets unlocks a lot of revenue potential which is lying idle in ports.
- LIZA V
