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Indian ports prove to be safe harbour for European funds

Indian ports prove to be safe harbour for European funds
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First Published: Sun, May 31 2009. 10 38 PM IST
Updated: Sun, May 31 2009. 10 38 PM IST
Bangalore: When India opened its ports to private investment a decade ago, it was a European firm that first landed at Indian shores.
Britain’s Peninsular and Oriental Steam Navigation Co. Ltd set up India’s first private cargo terminal in 1999 to handle containers at Jawaharlal Nehru port (JN port) near Mumbai. The company later expanded to ports in Chennai and Mundra in Gujarat before it was taken over by the Dubai-government owned DP World Ltd in March 2006 as part of a global acquisition worth $6.85 billion (Rs32,070 crore now). By then, Peninsular and Oriental had invested about $800 million in Indian ports.
The cargo-handling capacity at the country’s Union and state government-owned ports have to be doubled to 1,590 million tonnes (mt) a year by 2012 from about 757mt now, and a large part of this expansion is being driven by European operators.
APM Terminals Management BV, the container terminal operating unit of Danish shipping and oil conglomerate AP Moller-Maersk AS, has invested close to $230 million to build a separate container terminal at JN port, India’s busiest container port.
Gateway Terminals India Pvt. Ltd, 74% owned by APM Terminals and the rest by state-run Container Corp. of India Ltd (Concor), is the third container terminal operator at JN port.
It handled 1.46 million standard containers in the 12 months to March, compared with 1.29 million containers the previous fiscal year, making it the only container-handling facility at JN port to register higher volumes despite the global slowdown.
Since starting operations in 2006, Gateway Terminals has handled at least 3 million standard containers.
“Its top productivity of 188 crane moves per hour is a national record for India,” said Arvind Bhatnagar, the firm’s chief executive officer. “Gateway Terminals has demonstrated that public-private partnerships can not only succeed, but can thrive in India when proper business conditions are present.”
APM Terminals, the world’s third biggest container port operator, also has the rights to develop and operate Pipavav port in Gujarat for 30 years beginning September 1998.
The firm gained control of Pipavav port by acquiring a 54.8% stake from SKIL Infrastructure Ltd, the original promoter, in April 2005.
Since then, the port has seen investment of at least Rs1,100 crore and infrastructure upgrades, and APM says the port is now well-positioned in the market.
“We recently installed two new post-Panamax gantry cranes symbolizing our commitment to Pipavav port. The dredging project to deepen the port’s channel will be completed soon and provide a 14.5 metre draft...” said Prakash Tulsiani, managing director of Gujarat Pipavav Port Ltd.
The expansion plans involve creating facilities and purchasing equipment to handle about 3mt of bulk cargo a year as well as some 1.3 million standard cargo containers, up from the existing capacity for 500,000 containers.
At the Hazira port in Gujarat, Shell Gas BV, part of the Royal Dutch Shell Group, has set up a facility to handle 2mt of liquefied natural gas (LNG) after winning the rights from the Gujarat government to develop and operate the port for 30 years beginning 2002.
Shell Gas has a 74% stake in Hazira Port Pvt. Ltd, or HPPL, an entity formed to develop and operate the Hazira port, and the remaining stake is held by France’s Total Gaz Electricite Holdings.
“Shell has so far invested approximately $250 million in Hazira port,” said Deepak Mukarji, a spokesman for Shell group of companies in India.
As part of the contract with the Gujarat government, HPPL has to develop facilities to handle non-LNG cargo, including containers at the port. Shell is currently scouting for partners having expertise in handling non-LNG cargo to set up and operate such facilities at the port. “This process is on,” Mukarji said.
India’s container traffic is estimated to reach 21 million standard containers by 2016 from around 7.8 million now, according to the shipping ministry.
“India has tremendous potential for further economic output and performance. So we fully intend to participate in that growth as opportunities present themselves at other major Indian port locations...” said Gujarat Pipavav Port’s Tulsiani.
Jimmy Sarbh, the former head of Peninsular and Oriental in India, however, said the country is a hard place to do business. “You (have) got to be strong to succeed in India to make money, to get a good return,” he said. “But if you put up a good project and provide world-class services to customers, you will always get cargo volumes that deliver a return on capital for investors.”
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First Published: Sun, May 31 2009. 10 38 PM IST