Minor ports should also serve remote hinterland
Large scale private investment has substantially increased
the handling capacity of minor ports. What is needed is a change in approach so
as to create and develop minor ports that serve the remote hinterland and not
just the immediate hinterland, explains Dr. Jayakumar, Chief Executive
Officer, Pondicherry Port Ltd.
Ports handle around 95 per cent of India's total trade in
terms of volume and 70 per cent in terms of value. While major ports handled 70
per cent of the total cargo traffic, minor or non-major ports accounted for 30
per cent during the year 2007-08. The major ports in India are yet to meet
international standards in terms of vessel turnaround time, cargo handling etc.
Berth occupancy and low crane productivity further add to woes of the shipping
companies. These bottlenecks force private port developers and shipping
companies to eye stakes in the minor ports.
With the emergence of large private investments, the cargo handling capacity at
minor ports has increased, commensurate with the cargo traffic volumes. Minor
ports in India had a capacity to handle about 230 million tonnes of cargo and
the traffic handled was about 220 million tonnes during the year 2007-08. The
minor ports are expected to add about 350 million tonnes capacity by 2012,
taking the total minor ports handling capacity to 580 million tonnes by the 2012
- the end of the 11th Five-Year Plan. Whereas the major ports are expected to
add about 500 million tonnes to the present capacity of about 500 million tonnes
resulting in a total capacity of 1,000 million tonnes by the end of 2011-12.
While the capacity increase in major ports is about 100 per cent by the end of
2012, it is about 150 per cent in the case of minor ports with reference to the
year 2007-08. These figures would indicate the sharp growth activity at the
minor ports in the years to come when compared to major ports.
Though development of minor ports depends on several logistics and navigational
advantages - the facilities at places like Gujarat thrive on their proximity to
trade centers, well-developed coastal industrial base and the vast hinterland.
The foremost need is a change in the present approach of creating minor ports to
serve their immediate hinterland. Instead, such maritime facilities should aim
at catering to a much larger hinterland far away from them.
Over the years, the contribution of minor ports to the total traffic handled at
Indian ports has risen. A study of the pattern of traffic handled by minor ports
during the last 10 years would indicate that its share in the total port
traffic, which was only 12 per cent in 1997-98, has shot up to 30 per cent in
2007-08. Minor ports are in an advantageous position to reach their customers
more efficiently than what the major ports could do. The fact that the minor
ports are in close proximity with the local producers will be both an
opportunity and challenge. It is an opportunity because the port will be able to
attract local producers on the basis of lower inland transport cost, lower port
charges and more efficient and cost effective service. It will be a challenge
because neighboring major ports will have established infrastructure, better
facilities and frequent shipping services to attract the shippers to such ports.
The state governments have now found a great opportunity to offer attractive
terms to port developers and investors to make investments in minor ports. Port
developers, in general, find a refreshing contrast in the environment offering
various forms of concession - the concession period itself extending from 30 to
50 years. Further, many maritime state governments offer road and rail
connectivity to the port sites as their responsibility. State governments enter
into joint venture partnerships with equity participation in the special purpose
companies for port development. More importantly, the state governments have
given port developers full freedom to fix tariff dictated by market forces.
Minor ports remain outside the jurisdiction of the tariff authority for major
port trusts and this single factor does indeed raise the comfort level of the
port developers significantly. Yet another important attraction for the port
developer is that the state governments are making available the entire port
environment for development, so that the developer will also be appointed
conservator of the port.
The challenge that maritime state governments face is to create an
organisational and institutional mechanism to tame the bureaucracy and make it
investor-friendly. Many maritime state governments have already constituted
maritime boards to make the transition smooth and efficient. Though four
maritime state governments have agreed to constitute maritime boards in their
respective states, the process does not get speeded up as there is a lack of
political will and commitment to create an environment which is conducive for
investments in the port sector.
Another challenge that maritime state governments will have to face is to create
an enabling environment for port development by taking up the responsibility of
road and rail connectivity and assisting the developer in acquiring the land
needed for port development. In certain port development projects, it would be
desirable for the government to get involved in providing basic infrastructure
like breakwater, reclamation etc., by taking advantage of the viability gap
funding under the Central scheme. This would raise the comfort level of those
port developers, who intend to develop ports in remote areas.
There is clearly a need for private investment in ports and recognising this,
the maritime state governments have been formulating policies to attract the
private sector. Good bankable projects, whether it be for expansion of minor
ports or development of greenfield projects do not find any difficulty in
getting financial support from financial institutions.
As long as the ports do not understand that there is enough cargo for all the
ports to handle, there will be unhealthy competition between them. Synergies
could be developed between the major and minor ports by creating a level playing
field. Minor ports can fix their own tariffs, though they need to seek approvals
from state governments while major ports cannot. Thus, there ought to be a level
playing field by deregulation to promote 'co-opetition' i.e. cooperative
[May 19-25, 2008]