The Indian ports sector enjoy huge potential for development. But, certain challenges continue to restrain its growth. One of the prime challenges in the port sector is low efficiency, followed by low productivity of equipment, inadequate draught, capacity constraints and lack of specialized berths. Award and completion of PPP projects have also fallen behind schedule due to legal issues, slow clearance process, short coming in build operate transfer agreements etc.
Meanwhile, capacity constraints at government owned ports are driving up volumes at private ports whose traffic share rose from 7% to 34% over 1990- 2010. However, it indicates that if government does not take positive actions towards the development of major ports, minor ports are in line to take the share of big pie waiting in Indian market. EPC World brings you some interesting facts of selected minor ports owned by private companies, who are giving nightmares to major ports in India.
Mundra Port and Special Economic Zone
Mundra Port remains the gold standard in the industry and is best placed to benefit from India’s growing trade and infrastructure development. The company has built a 60mtpa (being expanded to 100mtpa) coal terminal to leverage on the growing demand for imported coal. The port also has 2 container terminals (1.25mn TEU each) and is building a third terminal to capitalize on the growth opportunity in India’s trade. The port is building a 5mtpa LNG terminal and adding 15mtpa bulk capacity.
MPSEZ has 2 bulk cargo terminals and 2 container cargo terminals with an effective handling capacity of 50- 55mtpa per year. It also has a SPM terminal with 25 mtpa capacity for crude imports. The port has seen strong cargo growth (22% CAGR over FY08-11) and steadily gained market share (5% of India’s cargo handled in FY10). MPSEZ is developing a 32000-acre SEZ near Mundra Port that should support volume growth.
Expansion of the coal terminal
The coal terminal (60 mtpa capacity) has been commercially operational since 1st February 2011. Mundra Port handled total coal volumes of 14.5 mtpa in FY11 of which 11-12 mtpa were trading coal volumes.
The company expects coal throughput to increase as 3300MW Bhadreshwar plant being set up at Mundra – Adani Power Ltd is planning to set up an imported coal-based power plant with a total capacity of 3300 MW at Mundra (660×5). This power plant is expected to be fully operational by FY16. The coal requirement for the same would be 12 mtpa, which will be imported via Mundra Port. The port has already set up 60 mtpa coal handling terminal in India and is planning to further expand the terminal to 100 mtpa with an investment of `2.8 billion to capitalize on the opportunity of increase in trade of imported coal. It also benefits because the Adani Group is the largest coal trader in India and has undertaken coal import contracts for NTPC and other government agencies.
Expansion of container terminal
The company is seeing strong pickup of container volumes at the port. To capitalize on the same, Mundra Port is planning to set up a new 2 million TEU p.a. container terminal at the port. Initial dredging work has commenced and land and site development for the same. The total capex required is expected to be close to `10 billion, and to be operational by FY14. Mundra Port is also looking to expand its bulk cargo handling capacity by 15 mtpa by FY13. The company has outlined capex of `1.5-1.75 billion for the same.
Essar Ports
The company has two operational ports at Vadinar and Hazira in Gujarat, on India’s west coast, with a cumulative capacity of 88 mtpa. The company is undertaking expansion (new berths at Hazira, Salaya, Paradip ports) which will add another 70 mtpa capacity by FY14. Around 73% of its peak cargo is expected to be derived from the expansion plans of Essar group companies in steel, power and oil & gas industries.
Essar Ports is undertaking a major capacity expansion, from 88 mtpa currently, to 158 mtpa which is targeted to be complete by FY13. However, analysts are conservative and factor in certain delays in obtaining forest clearances for the Paradip coal terminal and expect the terminal to be commissioned in early FY14.
Emergence as a large port company in India
Essar Ports has the following ports in its asset portfolio: Vadinar Oil Terminal Limited (VOTL) and Vadinar Ports and Terminals Limited (VPTL) have a total of 58 mtpa crude handling, storage and terminal facilities at Vadinar in Gujarat. They serve oil refineries in the region, and independent cargo traders and also provide facilities such as crude oil and petroleum product tankages, and cross country and sub-sea pipelines. The 2 berths at the port have the capability to handle VLCCs and Aframax ships.
Essar Bulk Terminal Limited (EBTL) is an all-weather 30 mtpa dry bulk port at Hazira in Gujarat. Pellets, limestone, coal and steel among other cargoes. At Hazira, the company is undertaking an expansion, with a 20 mtpa general cargo terminal to cater to third party cargo requirements. Essar Bulk Terminal (Salaya) Limited (EBTL Salaya) is a 20 mtpa multi cargo port being set up by the company at Salaya in Gujarat. The port is expected to handle imports of coal and export of pet coke and other bulk cargoes.
Paradip Iron Ore and Coal terminals – Essar Ports is also undertaking development of a 16 mtpa iron ore berth and a 14 mtpa coal terminal at Paradip in Orissa on India’s eastern coast.
The Essar Group is undertaking a major capacity expansion across its companies. It is expanding the steel plant at Hazira to 9.6 mtpa, the refinery at Vadinar to 20 mtpa and setting up power capacity of 11.5 GW in Essar Power. Essar Ports shall provide services to group companies for coal imports, coastal movement of iron ore, crude import and export of finished products. The capacity addition at the port is aligned to the capacity additions of the above ventures. Put together, these projects are expected to drive up captive cargo traffic at Essar Ports to 86 mtpa, providing a resilient revenue stream.
Growth in third party cargo
Once the port capacity ramp up is complete, Essar Ports aims to increase the share of third party cargo to 27% by FY15, from nil currently. The company is undertaking the following initiatives for the same:
1) Storage facilities are under construction at Vadinar, to cater to the requirements of independent traders in crude and petroleum products. Captive cargo is expected to grow from 40 mtpa in FY11 to 86 mtpa in FY14; 73% of peak cargo is from Essar group companies.
2) At Hazira, as per the concession agreement signed with GMB currently, the company can cater to third party cargo up to 50% of the captive traffic handled for Essar Steel. Essar Ports is currently handling some project cargo for L&T. Other companies in the vicinity, including Reliance and Kribhco, could also avail the port facilities once capacity ramps up.
3) The Paradip coal terminal is being developed exclusively for third party cargo. As per management, part of the 18mtpa coal traffic witnessed at the Paradip major port shall be diverted to the berth due to the increased mechanization and efficiency of the same.
MOU with Port of Antwerp International
Essar Ports has signed a pact with the Port of Antwerp International (PAI) for strategic collaboration in the areas of consultancy, investment, training and enhancing commercial relations in the Indian and international port sectors. PAI, a subsidiary of the Antwerp Port Authority, handled 178mn tonnes of cargo in 2010. For international cargo, it is the second largest port in Europe and the tenth largest in the world. The port is also the market leader in Europe for handling steel and project cargoes.
Essar is expected to benefit from the following strengths of PAI with this MoU. PAI is the world leader in sophisticated storage capability for liquid bulk and is the largest petrochemical cluster in Europe; Antwerp has the widest logistical service of all European seaports and has developed into the most important European centre for consolidation of less than container load consignments.
Gujarat Pipavav Port Ltd (GGPL)
APMM group-owned GPPL is one of the top 5 ports in India and the third largest on the western coast for handling container cargo, which makes it well placed to leverage on India’s container trade growth. The port currently has facilities to handle upto 0.6 mn TEUs of container cargo and 5 mn tones of bulk cargo annually.
GPPL is in the process of expanding its container yard, which is expected to be completed by mid-2011. This shall increase the container handling capacity at the port to 850,000 TEUs from 600,000 TEUs currently.
The port also has 4-5 km waterfront for the addition of incremental berths to meet growing container demand. Analysts expect an addition of 450-500 m berth length which will increase the bulk capacity to 11mtpa and container capacity to 1.3mn TEUs by 2015. The company will be investing around `5.5 billion for the berth expansion and an additional `2.1 billion for auxiliary expansion of yard and crane capacity.
Port Infrastructure
• APM Terminals Pipavav is all-weather, multi-cargo port. It currently has capacity to handle 600,000 container TEUs p.a, bulk capacity of 5 mtpa and liquid cargo capacity of 2 mtpa. The container cargo handling capacity is expected to go up to 850,000 TEUs by mid-CY2011.
• A chart datum draft of 14.5 m enables the port to handle bulk vessels carrying 81,600 mt of bulk cargo and container vessels of 6,200 TEUs capacity (among the largest container ships presently calling at Indian ports).
• The port has 5 berths (2 bulk, 1 container handling, 1 multipurpose, 1 liquid cargo) totaling to 1140 mts. The port has a total waterfront of 4-5 km, of which 1.1 km has been developed.
• GPPL has the right to develop 1,561 acres of land of which 485 acres have been developed. This yields sufficient scope for additional cargo handling facilities and other backup infrastructure for port services. Pipavav Shipyard Ltd., involved in shipbuilding. Other tenants include Central Warehousing Corporation, which owns and operates warehouses at the port, and Shell, which operates a tank farm.
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