The Indian Private Ports and Terminals Association is an association of private ports and terminal operators of container and bulk terminals at major ports in India. IPPTA addresses the need for a strong representative body of private players. While India is moving towards adequate port capacities, much remains to be done in infrastructure, S.S. Kulkarni tells Sandeep Menezes.
With huge capacity expansion in the Indian port sector, how much investment do you foresee in this sector during the 12th Five- Year Plan?
As per the statement of the shipping minister, the government intends to invest close to 73,800 crore to augment the major-port capacity from the present 690 million tonnes to 1,230 million tonnes by end of the 12th Plan period as well as to modernise the ports by deepening the channels, upgrade port equipment, and improve port connectivity and backup facilities.
The nine coastal states have also drawn up ambitious non-major port development plans in their respective states through private participation of close 1.45 lakh crore.
But keeping in mind the track record of the past four to five years, how much of it actually realises remains to be seen.
What do you think is lacking in current port infrastructure?
While we seem to be comfortably moving towards adequate port capacities, much remains to be done with regard to the other infrastructure viz. deep draft channels of at least 15-16 metres, port connectivity to the hinterland, adequate storage space within the port limits, and systems and procedures for quick clearance of cargoes. The productivity and efficiency at Indian ports is drastically affected because of these factors.
Hinterland cargo should be taken out or brought in swiftly from and to the port itself. What we see, instead, is a proliferation of CFSs around the port area because lack of adequate rail connectivity with the port. Government spending towards these facilities is a must. Infra-funds that provide long-term lending at reasonable rates/tax-free bonds to generate funds for infra-lending and creation of SPVs with government and railways as partners/viability gap funding are some of the measures that can be thought of.
The share of non-major ports increased from 7 per cent in 1990-91 to 36 per cent in 2010-11. Going forward, how do you foresee the scenario?
The non-major ports that have come up or likely to come up in near future are equipped with most modern facilities. Most of these are specialised ports and offer quick turnaround times for vessels/rail rakes and have dedicated clientele. It is therefore likely that in the years to come the trade may start patronising the non-major ports in a big way. It is reckoned that the share of cargo which is now in favour of major ports may reverse to 40:60 in the foreseeable future.
Dredging is a key issue which needs to be tackled on a war footing but requires major funding. Do you feel PPP in dredging should be explored?
Maintaining assured depths has become a bane for ports due to siltation on both the coasts. Maintenance dredging is the need of the hour. However, increasing the depths to at least 15-17 metres is also highly desirable to receive larger vessels – 8,000+ TEUs for containers and 1 lakh+ GT bulkers. The trade can only then benefit from the economies of scale.
India ports suffer due to high vessel related charges (as high as three to five times of neighbouring ports) since the dredging costs get added to it. The government needs to devise a scheme to subsidise the dredging requirements of the ports. This would be in line with the practice followed by many countries where dredging is sponsored by the government.
The need for creating a central dredging authority, as enunciated in the Maritime Agenda is utmost essential. If necessary, viability gap funding for dredging projects may be considered, along with private participation. Dredging must be treated at par with “land excavation” and be exempted from the applicability of service tax. The local dredging companies including DCI lack in terms of modern equipment and trained personnel. These capabilities must be developed through a process of investing in latest technology and training.
There are reports that private port developers may get a part of the funds raised through tax-free bonds allocated for port sector.
Although there was such talk last year, things have not moved forward as yet. The finance minister, though, has retained the provision of tax-free bonds for the maritime sector in this year’s budget too.
Global firms want to participate in port projects by bringing technology and capital but it is important to have a consistent and sustainable policy framework that is up to international standards.
A plethora of policies are on the anvil. But the most watched are the PRA Bill and the Draft Ports Act. Other policies include the land policy, captive port policy, monopoly policy, coastal shipping policy, shipping practices bill et al. Investors, including global players, are waiting and watching the situation. Nobody wants to firm up plans in a fluid atmosphere.