Bangalore: Antwerp Port Authority (APA), which manages Europe’s second biggest port, has begun talks with local companies for investment opportunities in building new ports in India, a top executive has said.
Expanding business: Cargo containers being off-loaded at Antwerp port in Belgium. PAI has finalized its first investment in West Asia. Abhijit Bhatlekar / Mint
“We are keen to participate by investing in the equity and share our know-how and expertise in building ports in India,” Yannick Dufraimont, a director at Port of Antwerp International (PAI), a subsidiary of APA, said in a phone interview from New Delhi on Sunday during an official visit to India.
“We are looking at investing in the development of one port on India’s eastern coast and at least two on the western coast,” he said. “That would be the ideal situation.”
Dufraimont said PAI is in discussions with around 10 local companies on potential investments in India’s ports, but declined to name these companies.
Earlier this month, the board of directors of APA cleared the formation of PAI, a vehicle to pursue development activities beyond Europe, particularly in growth regions with the potential to generate cargo for Antwerp.
PAI will put APA’s global plan into practice by acquiring stakes in foreign port projects with a reliable rate of return, located in regions such as West Asia, India, sub-Saharan Africa and Brazil, Dufraimont said.
PAI has finalized its first investment in West Asia, where it will soon sign an equal joint venture with Oman for building a port at Duqm in that country, he said.
The company would prefer to look at investment opportunities in India, the world’s second fastest growing major economy, on a “one-on-one basis” so that it can get into the business straightaway without going through the bidding route. “Besides, we prefer to partner with local firms that have adequate land and have possibilities to develop a port on their own,” Dufraimont said.
As a starting point, it will adopt the so-called landlord port model for choosing projects for PAI to execute or participate in.
In this model, the land and waterfront infrastructure are owned by the government or local authority, while cargo-handling and other essential operations are outsourced to specialist private companies that put up their own superstructure, including buildings and equipment.
Antwerp port, 100% owned by Antwerp city in Belgium, follows this model.
Like Antwerp port, India’s non-major ports, or those outside the control of the Union government, follow the landlord port model.
Several of India’s new ports, owned by state governments in Gujarat, Andhra Pradesh, Tamil Nadu, Maharashtra, Orissa and Karnataka, are being developed by private companies because the states don’t have money to invest. These ports could provide the ideal setting for PAI to enter the business of developing ports in India.
These ports handled 196 million tonnes (mt) of cargo in the year to end-March 2009, against a capacity of 250 mt.
The cargo handling capacity of these ports is being raised to 574 mt by 2012 from 250 mt now.
The capacity expansion will require an investment of Rs35,933 crore, of which 80% is expected to come from the private sector, according to the shipping ministry.
Dufraimont said PAI was reluctant to participate in the development of ports owned by the Union government as these were inviting private companies to boost their cargo handling capacity, which is not Antwerp’s core strength. Besides, these ports selected private cargo handling specialists trough the tender route.