APA in strategic pact with Essar Shipping

APA in strategic pact with Essar Shipping

Bangalore: Antwerp Port Authority or APA, which manages Europe’s second-biggest port in Belgium, has picked India’s Essar Group as a strategic partner to explore commercial and investment opportunities in the fast-growing Indian ports sector.

Essar Shipping Ports and Logistics Ltd(ESPLL), India’s second-biggest port operator outside state control and a unit of the diversified Essar Group, has signed a so-called memorandum of understanding (MoU) on Thursday with the Port of Antwerp International (PAI) for collaborating in consultancy, investment, training of port professionals and enhancing commercial relations.

PAI is a subsidiary formed by APA in 2009 to pursue development activities beyond Europe, particularly in growth regions with the potential to generate cargo for Antwerp. APA, fully owned by the City of Antwerp, loaded 178 million tonnes of cargo in 2010.

PAI’s brief is to put APA’s global plan into practice by acquiring stakes in foreign port projects with a reliable rate of return, located in strategically important regions such as West Asia, India, Sub-Saharan Africa and Brazil, according to Yannick Dufraimont, the chief executive officer of PAI.

PAI finalized its first overseas investment in West Asia by signing an equal joint venture with the government of Oman in 2010 for building a new port at Duqm in that country, he said.

“The strategic collaboration with PAI intends focusing on the fast-growing Indian port sector, particularly in Gujarat, including Hazira port and also abroad," a statement from Essar said.

The MoU is expected to lead to long-term partnership agreements in the field of consultancy, training, commercial and investment opportunities.

The two sides are expected to fine-tune their investment strategy, particularly for expanding the port in Hazira, where Essar has developed a dry bulk cargo handling facility with a capacity to load 30 million tonnes of cargo a year, a spokesman for Antwerp Port said. Essar is also building a 20 million tonne capacity bulk port at Salaya, also in Gujarat.

Besides this partnership, both will also collaborate on training port professionals.

“We are looking at investing in the development of one port on India’s eastern coast and at least two on the western coast," PAI’s chief executive Dufraimont told Mint in an interview last year.

PAI would prefer to look at investment opportunities in India 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," he said.

India will have to triple cargo-handling capacity at its ports to 3.2 billion tonnes by 2020 from the existing 1.01 billion tonnes to meet demand, according to the Maritime Agenda 2020 unveiled by the union shipping ministry in January. The capacity expansion would require an investment of Rs3 trillion.