Continuing with its endeavour to support infrastructure-led growth in India, the Asian Development Bank has granted a $40 million loan to Ocean Sparkle Ltd, one of the country’s largest port operations and management companies, for fleet improvement.

According to the Manila-based multilateral agency, the long-term loan finance to the company for improving its fleet will further enhance efficiency, lower freight costs, speed up shipping and ultimately benefit the entire country by providing a boost to the efforts towards expansion of maritime trade.

The project, which will run from 2014 to 2016, is ADB’s first private sector investment in India’s port sector.

“India is one of the world’s major destinations and hubs for global trade but relatively high cargo handling costs and slow vessel turnaround times undermine the efficiency and international competitiveness of its ports,” said Siddhartha Shah, Head of the Private Sector Unit at ADB’s India Resident Mission.

“Ocean Sparkle Ltd has an impressive track record in port operations and our long-term loan finance will allow it to expand and improve its services, which will ultimately benefit all of India,” he added.

OSL will use the loan to purchase up to 10 tug boats for use at ports within the country as well as in South Asian markets located along the busy east-west shipping routes. The loan will also help finance acquisition of two platform supply vessels and anchor handling tug supply vessels, allowing the company to take advantage of an expected increase in offshore oil and gas activities in the near future.

Ocean
© www.oceansparkle.com

OSL has a leading share of the Indian market for port operations and maintenance with a large fleet of tugs and other vessels used for activities ranging from pilotage, harbour towage, ship-to-ship transfers of crude oil and other cargo in the open sea, to lighterage services and dredging. It has stable revenues, an A+ rating from ICRA, and a strong record in securing repeat business.

ADB said in a statement that the improved services would help boost competitiveness of both major and non-major ports in the country as well as bring growth and new business opportunities to surrounding areas. Besides, it added, OSL’s expansion would generate 250 direct jobs and other indirect work opportunities in port operations and maintenance.

The 12-year loan is denominated in both US dollars and Indian rupees.

The Indian port sector is at present plagued by a plethora of challenges including insufficient capacity, inefficient operations due to lack of capacity and regulatory constraints, absence of seamless connectivity with other modes of transport and high tariffs. The 12th Five-Year Plan commits to address these challenges through adequate investment. The total requirement of funds for the port sector during the plan period (2012-17) is estimated at Rs. 1,83,890.88 crore.

Given that development of port infrastructure during the 12th Plan period will require considerable resources, the government has to rely upon the public-private partnership model in a major way, not only to augment the availability of resources, but also for improving the efficiency of service delivery and minimizing the time and cost overruns in construction of port projects.


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