Capacity additions in Kerala are needed only if the existing non-major port facilities are fully used, Capt Hari Achutha Varrier, Deputy Director–Ports, Kerala, tells Sudheer Vathiyath.
Non-major ports have the special concern that they do not have large Port Trusts to fund them. Where will the money come from?
We are planning to develop non-major ports in Kerala on public-private partnership (PPP), specifically Build-Operatre-Transfer (BOT) basis. So, the existing infrastructure will be the share of the government and the balance development activities required will be the share of developer. So the developer will invest in the existing facility and that way the ports will be developed. Also, there is a system of providing Viability Gap Funding (VGF) from the Central Government with a maximum availability of 20 per cent of the total project.
Although State Maritime Boards are being established, many maritime states may be planning so much capacity that in the absence of thriving export oriented zones in the catchment areas, viability is poised to be questioned. Your thoughts?
Kerala is a consumer state: The grains, construction materials, cement and petroleum products are imported to Kerala. However, some export is taking place in terms of rubber, cashew, seafood, textile and plywood, coir products, etc. Currently the exporters are using rail and road for moving the export cargoes. Instead of that if they are ready to divert this cargo to coastal shipping, there will not be any problem in availability of cargo. For that, they have to be educated. Some awareness must be brought in the benefits of coastal shipping. As you know, coastal shipping can help in saving time, cost and energy. Also there is less pollution and congestion, and fewer accidents than on road and rail.
Given that ports are poised for a massive capacity addition (and not enough on the infrastructure / connectivity side), what issues are brewing on the finance side of the equation?
Investors should have some confidence that post-investment, they will get a certain proportion in return. In Kerala the question is whether the capacity is fully utilised in the existing facilities. The answer is no. So the capacity needs to be used fully or at least 60-70 per cent, then only capacity addition is required in Kerala. For example, we have ports in Azhikkal, Beypore, Pallam and Vizhinjam. Only Beypore port is currently being used at 60 per cent capacity. All other ports are under-utilised with their capacities. For example, Kollam has a handling capacity of around 10 lakh tonne in a year but only around 50,000 tonne capacity is being utilised, and the remaining 50,000 tonne is not utilised. So that is to be utilised first and then only we can think about developing more facilities and adding capacities. Currently all the ports are well connected with roads.
Depending upon the demand in future road widening will be required. That is the first stage. Now, if the capacity is improved, then road widening will be required. Rail connectivity is required only at a later stage. Because, once rail connectivity is establiÂshed, that is to be used for which continuous cargo has to be there. If it is not there then there is no need of spending that money in rail connectivity.
What are the factors governing those issues?
As you know the ports are in congested and densely populated areas where providing new connectivity will be very expensive. Lot of eviction will be required for those evicted from acquired areas should be provided with new facility, which will be more expensive. The second issue is whether land is available. If land is available that can be acquired by spending money.
Would it be a good idea for SEZs/their investors to also invest equity in ports?
Yes. That is a good idea. If they get the benefit then it will be an attraction for investors to invest especially in ports, developing infrastructure, etc.
What are your current development plans?
We have appointed consultants for preparing feasibility reports and carrying out studies for developing ports. This includes Azhikkal in Kannur district, Bepur in Kozhikode District, Thankassery in Kollam district and Vizhinjam in Thiruvananthapuram district. We have detailed feasibility report for developing 4-5 ports in Kerala state. A private firm called Malabar Ports has come forward with their own plan to develop a port in Ponnani in Malappuram district. That was tendered for selecting the developer on Swiss challenge method and the work is given to Malabar Ports only. Environmental impact assessment (EIA) is currently going on for developing the Ponnani project and by November it is expected to be over. Once we get clearance from Central government the construction will be started.
We took on bids of feasibility reports prepared for Azhikkal port and floated a tender. A Mumbai-based cement company has shown interest and we have received their proposal. Now they have to prepare project reports and that will be sent to government for approval. In Beypore, we already have some capacity utilisation as I said earlier. Apart from that, the union territory of Lakshadweep is going to construct a 200 m wharf for exclusive use of their ships. Now main cargo and passenger ships to Lakshadweep are going from Beypore, so once they get a dedicated berth for them that will be a capacity addition. In Kodungallur, the Inland Water Transport Authority has a berth and we will be using it for the time being for a start and later
we will be constructing our own facilities there.
Going south, we have Kollam port with draft of 7 m and a 200 m long wharf, container handling forklifts, cranes, with a backyard and godown facility. So that port is ready for use. Further south in Vizhinjam we have an existing small port and from where cargo operation to Mali is going on.
What are the financing options for these development plans?
Whatever investments made is from the governÂment. The balance like Azhikkal is run by private cement manufacturing company and in Beypore it is done by the administration. In Ponnani the investment is done by private firm Malabar Ports.
In Kodungallur the finance will be from government side. There is a project pending with government on cement clinker units of Saurashtra Cement. So if we finally get the clearance there is a chance for one more clinker unit coming up in Azhikkal and one in Kodungallur. In Kollam our facility is already there.
At present only capacity utilisation is required. For that we are trying to get somebody for operation and maintenance contract. If we get approvals from the government three cement units will come up, one each in Azhikkal, Kodungallur and Kollam. These will be private investments.
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