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| Edited By: dna money |Source: DNA |Updated: Mar 23, 2018, 05:21 AM IST
Jimmy Sarbh is the man behind private container terminals in India. The former regional director of P&O Ports (South Asia and Middle East Region) developed India's first private container terminal Nhava Sheva International Container Terminal (NSICT) at JNPT, and several other terminals in the region in a short span. A port consultant now, Sarbh shuttles between Mumbai and Dubai. He discusses with DNA Money the issues and challenges faced by the port sector.
It is well overdue because The Indian Ports (IP) Act, 1908, and the Major Port Trust Act, 1963, both are out-dated. The government should consult unbiased experts to give their knowledgeable inputs in creating the new MPT Act. The New MPT should consider the following important points:
a) Port chairman and his team must be made accountable for non-performance and wrong decisions. Chairmen of ports are unwilling to make any major decisions, so all-major decisions are sent to the Secretary, Ministry of Shipping (MoS), for decision-making. New Act should empower decision makers.
b) Only professionals should be made chairmen of major ports, not bureaucrats. If the government wishes to keep control of its investments, the deputy chairman can be a bureaucrat.
c) All major, minor ports and inland waterway jetties must have custom posts, manned round the clock.
d) There must be a Central Committee of Secretaries from ports & road, environment, finance, commerce and rail ministry set-up to co-ordinate and make bold decisions for the development of all ports and related infrastructure leading to the ports.
e) The new MPT Act must change the way concession agreements are awarded to the highest bidder giving a percentage of its revenue share to the government or port. Under the new system, the award goes to the bidder who, for the life of the concession, adds the most value to the port. Realty developers should neither be allowed to hold equity in the port concession nor be given high qualifying points in the tender process as they have no interest in operating the port after having built it.
f) Tariff Authority for Major Ports (TAMP) should be abolished or converted to an appellate body with very limited powers.
g) A new formula should be introduced to reduce vessel-related charges. Cabotage should be lifted across all Indian ports to encourage transshipment.
h) The new MPT Act should place an obligation on the government or major ports to give their customers a minimum draught of 13.5 metre 24x7x365 days.
i) Direct delivery of containers from port to factory, and vice-versa, should be strongly promoted to save time, cost and land usage for large Container Freight Stations (CFS).
At present, tariff for major ports is set by TAMP. Tariff in minor port is set by the port owner. This gives minor ports an advantage over major ports. There should be a level playing field between minor and major ports. More ports should be developed, all along the Indian coast, to encourage healthy competition. Minor ports that do not perform as per their signed concession agreements (CA) should be fined and after a period of non-performance, their CA should be terminated by the government and a new port operator must be invited to manage the assets. State governments and Rail Vikas Nigam must help minor ports with good road and rail connectivity. The government must only allow two ports each on the eastern and western coast of India, to be controlled, directly or indirectly, by one entrepreneur or operator or shipping line. This will ensure competition and avoid a monopolistic situation. Container Corporation of India's (Concor) domination should end. There should be a level playing field for operators who have paid astronomical fees to buy the rail licences. Concor only wishes to protect itself and its revenues, while the private operators bleed.
I view this Sagarmala announcement favourably. But timely implementation, within budget, in India is always a huge problem.
Deep water ports are very expensive to create. Once the port construction starts, simultaneous construction of a six-lane road and dual-rail line connectivity should also commence. Land must be allocated surrounding the port area so custom offices, industries, warehouses, CFSs, inland container depots can be built to support the port with adequate volumes. Sagarmala project should address the issue of the Sethusamudram Project. This channel should be dredged and made navigable so vessels of at least 12 metre draught can safely navigate through this channel instead of going around Sri Lanka, thereby wasting time and fuel.
Vallarpadam is a disaster. Unfortunately, the developer may have made a serious design error in designing the wharf. The large quantities of silt from the sea flow into the port and banks up on the wharf wall. Dredging is expensive and is Cochin Port Trust's (CPT) responsibility. CPT won't regularly spend money for it thereby, reducing draught in the channel. A transshipment port needs a deep draught – at least 14 metre to 15 metre – for mother vessels to call.
The road and rail connectivity from Vallarpadam is inadequate for a transshipment hub port, hence volume does not easily flow out from Vallarpadam to other parts of India. There is a limited lifting of cabotage rules at Vallarpadam. Vizhinjam is a minor port in Kerala, being developed by the Adani Group. Vizhinjam will almost kill Vallarpadam as it will offer a deeper draught. The tariff will be set by the operator (not TAMP). The payment made to the Kerala government is so small that the entrepreneur can reduce vessel-related charges. This will result in lower tariff than Vallarpadam. The Kerala government is also assisting the Vizhinjam with soft loans for this project, including building basic infrastructure of the port.
The potential to develop the Indian inland waterways is huge. In order to ease congestion on India's already, heavily-burdened road and rail network, it is imperative that the inland waterways are properly and urgently developed. The jetties need to be equipped with cargo handling equipment, where barges and small coastal vessels can call. The inland waterways need to be properly marked with buoys, dredged to a minimum adequate draught so vessels can safely navigate around the clock. State governments need to allocate good back up land for cargo to be stored. Good road and rail connectivity is required to take the cargo directly to the factories offshore as well as inland. Custom posts need timely set-up for vigilant manning. Deep sea going officer and crew will not work on coastal vessels as the wages are much lower. Hence, a nautical school needs to be set up to train officers and crew so they get certified for inland waterway navigation.
Yes, it is time the port was shut. It has run its course and played a huge role in India's development, but now it is completely outdated. You cannot have a port with lock gate systems. Today, Mumbai Port has no business to be the owner of the largest land bank in Mumbai, when it hardly has any volumes to handle. CFSs are lying empty and acres and acres of prime land is lying vacant and being encroached by squatters. The Gammon India CT development has miserably failed. Many berths inside Mumbai Port are idle, thus losing money. It should be converted into a great real estate development, along the lines of Darling Harbour of Sydney. Dry docks should be converted into open-air amphitheatres; basins should be lined with cafes and high-end restaurants. Five star hotels should be constructed to take-in the magnificent views across the Mumbai harbour. A large Convention Centre should be constructed in the existing large sheds. High-end apartments and office buildings should also be constructed on all this vacant available land to generate good revenue. The government will earn more revenue from such a development rather than keeping this port creaking with acres of land vacant.
