In the past couple of years the Indian port sector saw some key developments on the public private partnership front. As much as eight PPP projects worth `32 billion has been awarded in the year 2010-11 and worth `40 billion projects were completed.
As on March 2011, 29 PPP projects were operational at major ports involving a total investment of `106 billion and capacity of 202 million tonnes per annum. Of these eight were captive power projects and remaining were BOT and BOOT based projects. In the year 2010-11, five PPP projects were completed worth `40 billion. Of these, the maximum investment of `30 billion was made in ICTT at Vallarpadam, Cochin phase I. The first phase has a quay length of 600 meters with handling capacity of about 1 million twenty foot equivalent units. India’s dependence on foreign ports for transhipment of its export-import containers is expected to reduce substantially.
Around 20 PPP projects involving an investment of `105 billion are under implementation/construction at major ports as of March 2011. Once completed, these projects will add a capacity of 116 mtpa. Of the ongoing projects, the maximum investment is at Cochin port for developing a liquefied natural gas terminal. The `32 billion projects are expected to add a capacity of 2.5 mtpa. Another big project is at Mumbai port involving construction of two new offshore container berths and the development of container terminals on BOT basis in Mumbai harbour at the total cost of `14.6 billion.
Says an analyst, “There are huge opportunities for private players on anvil. Around 24 PPP projects worth `170 billion are aimed to be awarded in the year 2011-12.” He further said, these projects will add capacity of over 230 mtpa at major ports.
The award and completion of PPP projects always behind schedule is a cause of concern for the industry. Since the finalisation of the model concession agreement for the port sector in January 2008, only 21 projects – 13 in 2009-10 and 8 in 2010-11 have been awarded by MoS. Of the total number of projects awarded in the year 2011-12, only about 30–35 % projects are new and the remaining are carried over from previous years. This could be attributed to delays in the award of projects as well as in the implementation of projects post award due to legal issues, Recently, many private players have backed out from construction of container terminal at New Mangalore Port due to unrealistic high tariff being set for the projects by the Tariff Authority of Major Ports.
Growth in traffic coupled with capacity limitations at the major ports will continue to drive demand for the expansions of existing terminal and berths as well as the creation of new infrastructure facilities at the major ports. This growing demand for additional infrastructure will continue to drive the demand for private sector participation in the Indian port sector. However, there is a need to streamline the procedure further to help PPP pickup pace.
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