Public CompanyPort capacity expansion may miss 2012 target
India’s government might miss a target to add capacity at its 12 major ports, as the economy grew less than anticipated and global trade slumped amid a recession, the shipping secretary said.
- Kochi LNG terminal to go on stream in "12 - LNG terminal to go on stream in 2012 - Dubai fallout: Missions directed to help workers - Govt sets up trust to implement projects funded by diaspora - Farm sector may shrink in Q3: FM - No instant solution to curb food inflation: Pranab
The government-controlled ports would have a capacity to handle 743 million tonnes of cargo by March 31, 2012, compared with a target of 1.02 billion tonnes, Shipping Secretary K Mohandas said in an interview in New Delhi.
Investment requirements in the five years to March 2012 might drop 61 per cent to Rs 22,000 crore ($4.7 billion), Mohandas said yesterday. India’s economic growth slowed to 6.7 per cent in the year ended March, as the global recession damped world trade, prompting sea carriers to park vessels. The slowdown needed to be used to ramp up infrastructure, said Anand V Sharma, a ports and shipping consultant.
“There is greater reason to make investments now because commodity prices have come down and interest rates have declined bringing down the cost of port development,” said Sharma, director, Mantrana Maritime Advisory Pvt Ltd in Mumbai.
Impact of inadequacies
India’s finance ministry has said inadequacies in the country’s ports, power, roads and other infrastructure shaves about 2 percentage points off the economic growth rate. Asia’s third-biggest economy sought to double its share in global trade by 2020 from 1.64 per cent in 2008, Commerce and Industry Minister Anand Sharma had said on November 11.
The volume of cargo at the major ports was expected to rise to 650 million tonnes in the year to March 2012, Mohandas said.
“The expected level of growth was not seen in the last two years,” Mohandas said. Still, “capacity will be adequate depending on traffic projections, depending on everybody’s assessment of movement of world trade and India’s share in world trade”.
India’s economy should return to 9 per cent growth in two years, Finance Minister Pranab Mukherjee had said on November 10. About 95 per cent of the nation’s trade by volume and 70 per cent by value are moved through sea, according to the government.
The country’s 12 biggest government-controlled ports had a capacity to handle 574.77 million tonnes of cargo in the year ended March 31, 2009, compared with the 530.53 million tonnes of freight moved through them in that year. Of these, the ports of Visakhapatnam and Chennai on the eastern coast and Mormugao and Mumbai on the western handled cargo exceeding their capacity.
Private ports benefit
Ports owned and operated by private companies might benefit from lower capacity addition at major state-run ports, Mantrana Maritime’s Sharma said.
Mundra Port and Special Economic Zone Ltd, India’s largest non-state cargo terminal, Gangavaram Port Ltd. and Krishnapatnam Port Co, both located on the eastern coast, are among the biggest private ports in the country. 3i Group Plc, a London-based private-equity investor that owns stake in Krishnapatnam and Mundra Port, said in September it was looking to make its third port investment as India’s freight traffic exceeded capacity. Warburg Pincus LLC, the New York-based private equity firm, owns a stake in Gangavaram Port.
Delayed Projects
There were 17 projects for facilities such as container terminals and shipping berths pending award at major ports in the country. These would add up to 183.5 million tonnes of cargo capacity, Mohandas said. As many as five projects, totalling about 50 million tonnes, would be awarded by the end of March, he added.
“Implementation is getting delayed as one has to go through several clearances,” Mantrana Maritime’s Sharma said. “In the bidding process, if someone doesn’t qualify and goes to court, it delays the projects.”
The government was seeking to improve the efficiency at major ports it owned, Mohandas said.
The average turnaround time for ships at Indian ports was 3.85 days in the year ended March 31, 2009, compared with 10 hours in Hong Kong, the government said in its latest annual economic survey.
The pre-berthing waiting time at major ports declined to 9.59 hours in the year ended March 31, 2009, from 11.40 hours in the same period a year earlier, the government said.