The new Major Ports Authority Bill, 2016, aimed at reorienting the governance model in central ports to a landlord port model in line with the successful global practice is also expected to bring transparency in operations of major ports.
In an interview, Ravi Parmar, chairman of Kandla Port Trust (KPT) talks about expansion, focus on container cargo as a growth area, new projects, including a port facility at Veeri in Kutch, and a plan to set up a renewable energy park.
Parmar also discussed Kandla Port Trust’s plans to achieve an overall cargo handling capacity of 185 MTPA (million tonnes per annum) by 2020 across three port facilities in Kandla, Vadinar and Tuna Tekra.
Kandla Port Trust has retained its position of being the country’s top major port, having crossed the 100 million tonnes mark of cargo handled for the second year in a row now (2016-17). What are your plans to keep the momentum going?
From our present cargo handling capacity of about 115 MTPA, we aim to reach 185 MTPA by 2020.
We are in the process of investing about Rs1,000 crore of which Rs415 crore would include setting up two berths for dry cargo, two oil jetties and a rail over-bridge. Also a part of this amount, which we might raise through the ECB (external commercial borrowing) route, will be for development of Smart Industrial Port City at Kandla.
At our port, we have an additional 7.5 million tonnes capacity that is ready for implementation. One of our major thrust areas is development of Kandla as a major liquid hub. About 60% of the cargo handled at Kandla is liquid while remaining is dry cargo. Essar Oil’s refinery at Vadinar is likely to undergo expansion by adding 25 MTPA to their refining capacity. All this cargo will be handled by Kandla Port Trust.
Various factors contribute to our growth story and this is reflected in our financial performance too. Kandla Port Trust’s net profit has gone up from Rs322 crore in 2015-16 to Rs.651 crore in 2016-17, a rise of 54%.
How do you see the overall port sector in the country shaping up? From a services port model how do you see Kandla Port Trust moving towards a landlord port model?
In Europe, 35-40% of the cargo traffic movement is through canals, seas and rivers whereas in India, it is less than 7% and is mostly by sea. So, this gives a huge opportunity for port developers in India. While Sagarmala project is a larger concept with an aim to develop all-round coastal development, it will also decongest highways and make transportation more cost effective with better cargo handling.
If you look at some of the most successful ports across the world like the Port of Antwerp, mainly run by municipal authorities or government bodies for centuries, only recently they began following the ‘landlord ports’ model after they felt that unless they do not lease out their land to industries that uses port for import or export, they will not be able to increase their cargo traffic.
Kandla Port Trust is implementing the ‘landlord ports’ model in a big way wherein industries are encouraged by the port authorities to set up by their operations in the vicinity of the port.
Kandla Port Trust has the largest land bank among all major ports in the country. The overall land bank of Kandla Port Trust would be close to 220,000 acres but a lot of this is in inter-tidal zone. We would have close to 25,000 acres that can be utilized for warehousing, salt farm, tank farms, etc.
Land was earlier leased out by Kandla Port Trust at nominal rates perhaps due to lack of demand back then. However, the new land policy guidelines for major ports wherein land can only be leased by way of auction has unlocked a lot of value for major ports like ours. For example, we auctioned 12,000 acres of salt pans last year that gave us huge premium. Earlier, we used to get Rs.144 per acre per year while this new market-determined rate gave Rs.39,000 per acre per year.
The Smart Industrial Port City project which is one of our major upcoming projects and includes a smart industrial zone at Kandla port will give a major boost in this direction. The project envisages to develop a smart industrial zone at Kandla and a well-planned modern township at Gandhidham.
You have been the chairman of two major ports of the country – earlier at Mumbai Port and presently at Kandla Port Trust. How are the two different from each other?
The challenges are different for both. Mumbai port is 150 years old and its draft is a major constraint. Also, evacuation is a major issue in case of Mumbai as the city has outgrown the port. The development of Mumbai also gets restricted in the port area. Also, land is very scarce and this results in high storage charges. In comparison, Kandla is a modern port and it can easily go for mechanization. Kandla Port Trust has vast availability of land and with the national highway right up to the gate and a rail track right up to the berth, Kandla port can afford to have reasonable storage charges. Also, in the last three years, a lot of new projects have been taken up by Kandla Port Trust.
At Kandla port, two berths for container terminals were commissioned a few months ago. Where does container cargo fit in your overall growth plans?
Having terminated a contract with a private company after they failed to meet minimum operation targets, we auctioned Berth No 11 and 12 to another private entity last year. The trend of commodities being containerised is growing rapidly in the port industry and we wanted to get a strong foothold in container handling industry. The two terminals became operational on January 28 this year and so far we have handled 10,000 TEUs (twenty-foot equivalent units). These two berths will be a major achievement in attracting additional cargo as we hope to handle more than 1 lakh TEUs this year. Container cargo is the new growth area for us.
Non-major ports like Adani group’s Mundra port have been giving some stiff competition to major ports. Your comments on this…
Competition is always good. In the past, a lot of traffic from Kandla had migrated to some privately owned non-major ports as their storage capacity was higher and their rentals were lower as compared to ours. We auctioned land for setting up liquid storage tank farms, resolved congestion issues and lowered our rentals, as a result of which we reversed the trend of cargo being diverted to other ports. We have one of the lowest cargo handling charges which is about Rs62 per tonne. Also, we handle a wide range of cargoes including sand, coal, timber, petroleum & oil products, agri-commodities, etc.
What is the progress on Chabahar Port project in Iran that you are jointly doing with Jawaharlal Nehru Port Trust (JNPT)? Are you looking at any other overseas projects?
India Ports Global Pvt. Ltd (IPGPL), the JV between JNPT and Kandla Port Trust, has recently invited bids for selection from private companies for setting up a container terminal.
IPGPL will develop two container terminals and three multi-purpose cargo berths. India and Iran had signed a memorandum of understanding (MoU) in May, 2015 regarding the development of the Chabahar Port. The port is of great strategic importance for development of maritime transit traffic to Afghanistan and Central Asia.
IPGPL is looking at a couple of more overseas port projects including one in South Africa.
Are you looking at any new port projects in India?
We are looking at developing a port facility at Veera which is close to Kandla. The area has a natural draft of 19-20 metres and we are looking to develop this for setting up an SPM (single point mooring).
What is the status of a 5,000-hectare special economic zone that Kandla Port Trust had proposed to set up in Kutch some years ago?
We have been told by the state pollution control authority that about 2500 hectares out of the total 5,000 hectares land identified for our port based multi-product SEZ falls in the coastal regulatory zone area. So, we are now proposing to set up a renewable energy park in this area and are studying its feasibility. We are actively pursuing the SEZ project and awaiting some necessary approvals.