Week ending July 8, 2001


News on Ports

Khoday group plans LNG terminal in Karnataka
Bangalore-based Khoday India is setting up an LNG terminal and a 500 mw power plant on the west coast. The project, which is estimated to cost Rs 3140 crore, is likely to be located at Gokak in the Belgaum district or at Gokarn in the Uttar Kannada district of Karnataka. M/S Engineers India, have been entrusted with the work of preparing the techno-feasibility report, in addition to working out the fuel linkages and other details.

The Karnataka government has accepted the Khoday group's request for 100 per cent stamp duty exemption and concessional registration charges. The unit will also be entitled to infrastructural facilities and incentives besides entry tax exemption for import of construction equipments, plant and machineries.

Ports service tax deferred
The five per cent service tax on port services, which was to have come into effect from the 1st of July, 2001, has been temporarily deferred.

In the absence of a gazetted notification specifying the date of enforcement, the levy has been postponed and according to industry sources, is likely to take effect from the 16th of July. All the ports in the country have deferred the charge, pending due notification from the Revenue Department, Ministry of Finance. The ports' decision has led shipping lines and cargo agents to also defer their hike in terminal handling charges(THC)/inland haulage charges(IHC).

The applicability of the ports service tax, as per the Finance Bill 2001, would be on any service rendered by a port(major port) or any person authorised by the port in any manner in relation to vessels and goods.

The value of taxable service would be calculated on the gross amount charged by a port to any person in relation to port services.

Kochi container terminal plagued by low productivity
Declining productivity at the Kochi Container Terminal has affected the export of stuffed containers to various destinations. Productivity at the terminal has come down to 50-55 moves per shift, as against the 80-85 moves per shift which was prevalent two months ago. The reasons attributed by the vessel operators include inexperienced operators, improper stack planning and frequent equipment breakdown, coupled with the onset of the monsoon, which hampered loading and unloading operations.

Improper stack planning has also led to unnecessary congestion, in the terminal, with improper movement of empty containers. Furthermore, the transfer of 50 per cent of the experienced equipment operators from the CT to other departments has left the terminal in the hands of largely inexperienced staff.

Shippers have also pointed out that while most container terminals are managed by a Terminal Manager looking after both traffic and operations, Kochi had separate managers for the two functions, which lead to a general lack of coordination.

Port officials have denied that there has been a drop in productivity. According to them, the officials pointed out that the introduction of VRS and a roll back on the retirement age had resulted in the induction of new staff in the terminal. The problem of inexperience will be solved shortly, as the port had initiated steps to provide them with training.

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News on Shippings

Latest gas discovery named "ANNAPURNA"
The new gas discovery made by Cairn Energy in the Krishna Godavari deep water block has been named "Annapurna" by the Petroleum Minister, Ram Naik. The discovery, the first from the 25 blocks awarded under the first round of the New Exploration Licensing Policy(NELP), has been made offshore at a depth of 1000 metres and a well depth of 2330 metres below sea level. The initial estimate of reserves is in the range of 21 to 28 billion cubic metres of dry gas, mainly methane. The well flow has been at a combined stabilised rate of more than 2.3 million standard cubic metres a day through a 64/64 choke.

The discovery bodes well for the region, as there is great demand for gas in Andhra Pradesh and the nearby areas. This will also encourage further oil and gas exploration in the area, especially in the Krishna Godavari basin.

Indian shipping gets government attention
The government is stepping up efforts to achieve a net increase of two million Gross Registered Tonnage (GRT) during the Ninth Plan Period. If all goes according to plan, the country's GRT will move to nine million tonnes as against the current level of 6.93 million GRT. The government also has plans to carry out exercises for phasing out and replacing vessels to the extent of 1.7 million GRT.

The effort has got off to a good start. In the year 2000 itself, 55 vessels with an aggregate of 257461 GRT have been added. In the same year, 16 vessels accounting for 360650 GRT were phased out. The overall share of Indian ships in the total overseas trade was about 31.5% in 2000, though the share in liner cargo was just 7.3%.

Recognising the importance of the shipping industry to the overall growth of the economy, the government has initiated various steps to make Indian shipping more competitive. Fleet modernisation and diversification has been accorded priority in the Ninth Plan. Capital market and external borrowings have also been made easier.

The Government has also made changes in the Merchant Shipping Act to improve the procedure for recruitment, training and retention of manpower in Indian Flag vessels, in addition to working towards developing coastal shipping.

DG-Shipping stresses luxury line potential
The Director General of Shipping, Mr D T Joseph, has urged the government to promote Indian entrepreneurship in the lucrative cruise line sector, which is currently dominated by foreign players. Speaking at a Seminar on 'Development of Passenger Ferry Service' at Kochi organised jointly by the Institute of Marine Engineers, Kochi branch and the Kochi chapter of the Company of Master Mariners of India, Mr Joseph said that the sector had been growing rapidly internationally because of the marketing strategies adopted by the players, while the sector was still in its infancy in India.

A rough estimate showed that around 25000 Indians went on various cruise lines aboard last year, a market which could be grown using innovative marketing strategies, possibly through the net. The director drew a parallel with the railways' "Palace on Wheels" and urged the government to pioneer a similar concept in shipping. He also suggested the formation of a maritime constituency to facilitate focussed representation of the sector.

Also speaking on the occasion, Dr Jacob Thomas, Chairman of the Cochin Port Trust said the port was planning to improve infrastructure by building exclusive passenger cruise terminals to exclusively handle cruise lines, to leverage Kerala's growing importance as a tourist destination. Mr M.K.M Nair, President, Cochin Steamer Agents Association, proposed the development of a passenger ferry service at Kochi.

APL for more flexible Cabotage Laws
APL (India) Pvt. Ltd, the wholly owned subsidiary of APL Singapore, has urged the Director-General of Shipping in India to relax cabotage restrictions to enable the company to undertake feeder operations on the country's east and west coasts.

According to Mr. Ian Claxton, Regional Managing Director in-charge of India, Sri Lanka and Bangladesh, Chennai is being considered as a probable transhipment point. Nhava Sheva International Container Terminal is the port of call for the container line's vessels, belonging to the West Asian Express Service, on the west coast.

In 2000-01, the company's throughput was around 11 per cent of the country's total throughput of 2.4 million TEUs. This year they plan to move that figure up to 15 per cent of the country's projected throughput of 2.8 million TEUs. To facilitate better handling of these increasing volumes, APL is in talks with the Container Corporation of India (Concor) to work out a package to transship containers inland through Concor's inland container depots.

Addressing the 63rd AGM of the Calcutta Freight Brokers' Association(CFBA) on Friday, Mr Claxton said that it was due to poor infrastructure that the penetration of containerisation in India was only 40 per cent, and stressed the need to upgrade facilities to improve container throughput. Mr B.D Mookerjee, Chairman of CFBA, emphasised the need for fundamental changes in Cabotage laws and certain customs procedures, along with improvements in handling equipment, labour productivity and operational efficiency in ports and rationalisation of tariffs.

CIWTC barges still detained at Bangladesh Ports
Six barges and three tugs used for towing barges, belonging to the government owned Central Inland Water Transport Corporation(CIWTC) have been detained at the Bangladesh ports of Khulna and Mongla since April, thanks to internal problems. Five of the barges were carrying wheat to Khulna while the sixth was carrying fly ash. The vessels haven't been cleared because of the strike that has virtually halted all operations.

The Chairman and Managing Director of CIWTC, Commdr (Retd) S.C. Dua during his recent visit to Dhaka took up the matter with the concerned authorities, who promised to do the needful. However, the vessels are yet to be released.

Mackenzie, MSC expand operations
UK-based freight services agency and NVOCC (non vessel owning cargo carrier), F S Mackenzie, already active on the trade route between the UK and India, plans to introduce a new direct export services from JNPT/NSICT to benefit Indian exporters. The company currently operates a weekly service between Felixstowe and JNPT/JSICT with a 25 day transit time, designed to benefit importers. The launch of the new service will provide a better balance between imports and exports.

Meanwhile, Switzerland's Mediterranean Shipping Company(MSC) has upgraded its fortnightly sailings to India via the Red Sea and Pakistan to a weekly service. The service is operated with six vessels each of 2000 TEU capacity.

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