The Hindu Business Line : ChPT to operate existing iron ore facility till 2008

THE Chennai Port Trust (ChPT) has decided to operate the existing iron ore facility till 2008 and is also planning to build a second container terminal at the port with private investments in two related moves which will deal a big blow to the Chennai Container Terminal (CCT) run by P&O Ports.

"We have informed P&O Ports about our decision to operate the existing iron ore handling terminal till 2008," a top Port Trust official told Business Line.

Invoking a clause in the concession agreement, P&O Ports had urged ChPT to hand over the existing iron ore facility operated by the Port Trust to CCT for its conversion into a container terminal as one of the ways to realise the goal of making CCT a gateway hub for the east coast of India through expansion of existing facilities.

Currently, CCT has a box yard area of 22 hectares with a capacity to store 6,50,000 twenty-foot equivalent units (TEUs). "CCT has started facing yard congestion due to lack of storage space and this will only multiply in the near future unless remedial action is taken soon," a P&O Ports official said. Last year, CCT handled 5,39,000 TEUs while this fiscal, it has so far touched 3,63,000 TEUs and is expected to end the year with a volume of 6-6.5 lakh TEUs.

The conversion of the iron ore berth into a container terminal will enable CCT to have a quay line of over 1,000 metres with associated back-up area of 57 hectares, allowing it to have the critical mass required for a hub port and compete with Aden, Salalah, Singapore and Colombo Ports.

"As per the concession agreement, the conversion of the iron ore berth into a container terminal is approved in-principle. It is ChPT's obligation to hand it over to CCT," the P&O Ports official claimed.

While admitting that the agreement provides for a clause to convert the iron ore berth into a box facility, the ChPT, however, says that it was under "no obligation" to hand over the iron ore terminal to CCT. "We are not bound to hand over the iron ore facility to CCT. If at all this has to be done, it needs to be approved by the competent authority — the Board of Trustees," the Port Trust official said. Moreover, CCT will have to comply with a certain Minimum Guaranteed Throughput (MGT) stipulated in the agreement after the iron ore berth is converted into a box facility.

The satellite port at Ennore, which was designed basically to handle dirty cargoes such as coal and iron ore, is yet to start full-fledged operations. Though, Ennore had started barge loading of iron ore, this has not found favour with the trade.

"In such a situation, the iron ore exporters from the Bellary-Hospet region will have very few choices in terms of a port to ship their cargo. How can we shut the door for iron ore exporters when there is so much of demand from India. The country has to export iron ore, but where will the exporters go," the ChPT official noted. Chennai Port has so far handled 5.8 million tonnes (mt) of iron ore (one of its major sources of revenue) this fiscal as against a target of 9.4 mt.

The ChPT had given an undertaking that it will not set up a parallel, competing facility for three years after CCT started operations on November 30, 2001.