Mumbai: Dubai-government owned marine terminal operator DP World is in talks with the Adani Group to acquire two additional berths at the Mundra port in Gujarat, as it looks to consolidate its presence in the country. The berths, to handle container cargo, will cost at least $70 million (Rs308 crore).
“We have decided to exercise the option to buy two more berths,” said Anil Wats, executive vice-president and chief operating officer of DP World, which handles more than 40% of India’s 5 million TEUs of container cargo. TEU, or 20-foot equivalent unit, is the standard size of a container, and is a common measure of capacity in the container business.
Given its proximity to the industrial hinterland in the west and north, the Mundra terminal, with two berths, has seen container traffic grow at 54% year-on-year. The terminal handled 0.459 million TEUs during 2006, compared with 0.298 millionTEUs in 2005.
With India’s trade growing at 18% a year, cargo handling capacity of ports is under significant strain. Acquiring berths is part of the second phase of the Mundra terminal development. This will raise its capacity by 1.2 million TEUs a year.
India’s largest engineering firm Larsen & Tubro is building the berths that DP World proposes to acquire. The berths are expected to be ready for operations by the middle of this year, and DP World plans to spend a further $100 million on equipping the terminals. This will allow the port to compete with the Jawaharlal Nehru Port Trust (JNPT) in Maharashtra, India’s largest container port.
The existing 1.3 million TEU container terminal at Mundra came under DP World, following the acquisition of P&O Ports in March 2006. P&O Ports had acquired the rights to operate the Mundra berths from Adani in June 2003 for $195 million.
DP World also owns container terminals in JNPT, Chennai port and Visakhapatnam port, giving it a unique position of operating from both the west and east costs.
Mundra port has several natural advantages, such as the deepest berth depth (18 metres) on the western coast of India. This allows large ships to enter the port .A large portion of cargo worldwide is now being moved on larger ships and poorly maintained Indian ports are not able to accommodate such traffic. This has forced the cargo ships to unload at bigger ports such as those in Malaysia, Singapore or Sri Lanka, and reship the cargo in smaller ships to India, adding both time and costs.