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i-maritime news letter

Gujarat, port of choice for private players - 2012-02-06

Gujarat took the lead in privatising its ports 15 years ago. The results have been astonishing. The State's minor ports or non-major ports (NMPs) today have a lion share of 73 per cent in the total cargo handled among all the NMPs in the country. In other words, three-fourth of the cargo handled in NMPs are from Gujarat ports.

The gap between the leader (Gujarat) and the second placed (Andhra Pradesh) in cargo handling reveals Gujarat's success in promoting its ports.

The success of Gujarat through its privatisation policy can be replicated by other States in developing the NMPs as they come under the purview of the State governments. Though all the maritime states have a policy to promote the ports, most of them are still in ‘paper,' said an official of a leading shipping line.

Out of the total 314 million tonnes (mt) handled by non-major ports in 2010-11, about 230 mt or 73.39 per cent were handled by NMPs in Gujarat. Andhra Pradesh was a distance second handling 258 mt or 16.64 per cent of the total cargo share while the percentage of other states was in single digits. There are over 180 NMPs in the country.

The success has been mainly attributed to the integrated Port Policy announced in December 1995 by the Gujarat Government.

The Union Shipping Ministry in a report too observed that there has been a sustained increase in cargo throughput, capacity addition and improvement in capacity utilisation in Gujarat. In 2010-11, nearly 40 mt capacity was estimated to have been added at non-major ports in Gujarat.

The capacity of NMPs in Gujarat has nearly doubled in the last eight years. “Gujarat is one of the States that have played a proactive role in the development of minor ports on its coastline,” the ministry said in its reports.

Meanwhile, the Gujarat Government is planning to undertake developmental schemes on the existing ports of Gujarat Maritime Board with an expenditure of $43.67 million, with a possibility of private investment worth $1.06 billion.

Other maritime States such as Tamil Nadu, Maharashtra, Andhra Pradesh and Kerala should replicate the success of Gujarat. While plans have been drawn by various governments, they are still in paper, the official of the shipping line said.

Various maritime states have drawn ambitious programmes to create additional capacity from 2010-11 to 2019-20.

The states have identified projects for development of non-major ports at an estimated cost of Rs 1,67,930 crore for creation of additional capacity of 1,294 mt.

Private sector is envisaged to fund most projects. It is envisaged that the private sector will meet more than 90 per cent of the cost of development.

Remaining requirement will be contributed by State Governments through internal resources/gross budgetary support/internal and extra budgetary resources.

A state-wise analysis of proposed investment in projects indicates that investment in non-major ports of Gujarat would be around 44 per cent of the total investments in non-major ports during 2010 to 2020. Maharashtra, Orissa and Andhra Pradesh are the other maritime states where investments of more than Rs 10,000 crore each in the next 10 years are planned.

So, what's the success formula in Gujarat? Focus on port-led industrialisation; setting up of a maritime board and announcement of ports public-private-partnership policies are way ahead of other States; availability of vast tracts of land and proactive development of port connectivity projects through development of roads and rails have largely helped the State in becoming a key player among the minor ports, says K. Ravichandran of ICRA Credit Rating.

Political stability in the past decade has also been a factor behind the rapid growth of the port sector in the State, he said. Frost & Sullivan believes that the development of non-major ports in Gujarat was mainly due to the investor-friendly policies of the State government.

Also, quick decision making coupled with low bureaucratic delays has been a key driver for attracting investments in Gujarat.

Port of Mundra, Pipavav, Gangavaram, and most of the ports under Gujarat Maritime Board are likely to draw maximum traffic due to their improved cargo handling capacities, said Subir Shah, Senior Consultant, Transportation & Logistics Practice, Frost & Sullivan — South Asia, Middle East and North Africa.

Capacity at major ports in India is expected to grow from 574.5 mt to 926.6 mt from 2009 to 2015 at an annual growth of 8.3 per cent.

Hence, a significant level of capacity expansion is needed. However, most of the capacity addition at major ports is being done to handle more containers, owing to increasing preference for containerised transportation among the manufacturing industries in the country.

Source: Hindu Business Line