The Port of Rotterdam Authority, which manages Europe’s biggest port, plans to set up a company in partnership with a local private firm to manage ports in India, a top official said.
“Our expertise and strength lie in managing ports. We are not into development of ports or handling cargo,” said Pieter Struijs, senior executive vice-president and chief operating officer, Port of Rotterdam, during a trip to India last week.
“This does not require any major investments,” he added but declined to give further details. Port of Rotterdam has advised the Indian government in preparing a business development plan for the 12 major ports it (the Union government) owns.
The proposed port management company will look at opportunities in managing greenfield and private ports, Struijs said. The 12 Union government-owned ports are managed by a board of trustees, based on the service port model where operational activities such as tugs, pilotage, linesmen, stevedoring and warehousing are the responsibility of the port trusts.
The trusts also own the land and water front on behalf of the government, limiting the opportunity for privateplayers.
India’s new generation ports, owned by state governments in Gujarat, Andhra Pradesh, Tamil Nadu and Maharashtra and being developed by private firms could provide the ideal setting for the Port of Rotterdam Authority to launch its port management business in India.
Some of these ports, referred to as non-major ports, handled 185.54 million tonnes (mt) of cargo in the 12 months to March 2007, accounting for about 25% of the cargo handled at all ports in India. The 12 ports owned by the Union government handled 463.84mt of cargo in the same year, as against a capacity of 508mt.
In comparison, the Port of Rotterdam handled 406.81mt in calendar year 2007, including container cargo of 10.8 million twenty-foot equivalent units or TEU. Rotterdam thus became the first European port to break the barrier of 400mt of cargo and 10 million TEUs. A TEU is the standard size of a container and is a common measure of capacity in the container business.
The cargo handling capacity of India’s non-major ports, both existing and new ones, is projected to rise to 839.16mt by 2012 from the existing 228.31mt. The capacity addition needs an investment of Rs35,933 crore, of which Rs28,664 crore, or 80%, is expected to come from private companies.
The port management company planned in India by the Dutch firm would follow a model similar to the one in Oman, where the Port of Rotterdam has a joint venture with the local government for managing the port of Sohar. The Sohar Industrial Port Company, an equal joint venture between the Oman government and the Port of Rotterdam, was awarded the contract to manage Sohar port for 25 years beginning 2002.
The Port of Sohar is managed according to the principles of the landlord port model, which maximizes the involvement of the private sector. India’s non-major ports are following the landlord port model for development and operations.
In the so-called landlord port model, the land and waterfront infrastructure is owned by the government or local authority, while cargo handling and other essential operations are outsourced to specialist private firms who put up their own superstructure including buildings and equipment.