The Hindu Business Line : Govt to allow private players in deepening port channels

THE Government is planning to broaden the scope of private sector participation in Indian ports by throwing open a new segment, deepening and maintenance of port channels to enhance their drafts for private investments.

Realising that most of the major ports in the country suffer from draft restrictions, which limits the sizes of berthing vessels, the Government is considering a proposal to allow domestic and foreign companies to undertake draft-deepening projects.

"These projects will be on similar lines of private road projects. Private companies will be allowed to undertake channel-deepening projects to the required draft and maintain the draft for the licence period. The port will, in turn, pay the user charges to these companies, perhaps on the basis of number of ships that enters the port," sources told Business Line.

As these projects will involve huge amount of dredging works, industry analysts expect that this initiative may attract the global dredging majors - some of these dredging companies are already operating in the Rs 650-crore Indian dredging market.

Private terminal operators could also pick up stakes in these projects, as a deeper draft will enable them to bring bigger ships and improve their economies of scale.

At present, private participation in ports is limited to building and operating terminals/jetties on BOT basis and leasing of cargo handling equipment. In this segment, so far 19 projects involving a combined investment of Rs 6,000 crore have been approved - 13 of these involving an investment of Rs 2,100 crore have already started operations and the remaining six involving an investment of Rs 3,900 crore are in different phases of implementation.

Port privatisation has so far attracted major terminal operators such as Dubai Port International (at Kochi and Visakhapatnam), PSA Corp of Singapore (Tuticorin) and P&O and Maersk A/S (JNPT).

According to Government estimates, private sector investments in major ports may exceed $2.33 billion involving 42 projects within a decade.

Draft restrictions are seen as a major handicap for Indian ports on the way to become world-class assets, especially with the increasing trend of deployment of larger capacity vessels. The Indian ports, which together handled 383 million tonnes of cargo last fiscal, is expected to handle 520 million tonnes in the next eight to 10 years, as projected in the National Maritime Development Programme.

In the light of this, most of the major ports have put up on their drawing board projects aimed at increasing their draft. Jawaharlal Nehru Port, which handles about 50 per cent of India's container traffic, is one port that is severely constrained due to draft restrictions.

The port proposes to deepen its draft from the existing 12.5 mts to 14 mts at a cost of Rs 640 crore in the first phase and subsequently to 16 mts at a cost of another Rs 1,600 crore in the second phase.

Paradip port is another port that requires immediate deepening of its draft - it has put up on its drawing board a Rs 100 crore project.

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