The Hindu Business Line : `Road, rail connectivity

AN official committee says that each port in the country should preferably have at least a four-lane road connectivity as well as double-line rail connectivity so that evacuation of cargo from the port and movement to the port areas achieve synchronicity, improving the competitiveness of the domestic ports as also the foreign trade.

Sources in the Government told Business Line that following a directive from the Prime Minister, Dr Manmohan Singh, in one of the meetings of the Committee on Infrastructure, it was noted that poor rail and road connectivity was affecting cargo movement, and a Committee of Secretaries (CoS) under the Chairmanship of Member-Secretary Planning Commission, with Secretaries of Shipping, Road Transport and Highways, Environment and Forests, and Member Traffic (Railway Board) as members, was set up.

Handling additional traffic: This committee met five times and finalised its views recently in a report for the Prime Minister's Committee on Infrastructure, the sources said adding that even as new technology and capacity building saw to it that the aggregate capacity available at ports matches the current requirement, the ports are unable to handle additional traffic.

This is presumably because of slow evacuation of cargo from the ports that are unable to ensure a quicker turnaround of ships (extant average turnaround time at major ports is 3.42 days).

This adversely attenuates the competitiveness of Indian ports vis-à-vis other ports in the neighbourhood. As such, it is crucial that connectivity of major ports with the hinterland is beefed up not only to ensure seamless flow of traffic, but also to meet the needs of projected spurt in traffic.

It may be noted that the dozen major ports established by the Central Government today handle about 75 per cent of the maritime cargo, which has increased from 19.38 million tonnes in 1950-51 to 383.63 million tonnes by the end of 2004-05.

Funding: Referring to the views of the CoS, the sources said that on the issue of funding the connectivity projects, the Department of Shipping underscored that these proposals needed to be vetted from a moderately liberal perspective.

As per the current funding pattern for road connectivity projects, these are implemented by the NHAI (National Highway Authority of India) through a special purpose vehicle (SPV) where not more than 30 per cent project cost is borne by the NHAI, the Port Trusts contributes up to 30 per cent and the rest is met by borrowings from the market.

As such, the CoS is understood to have suggested that instead of pursuing the SPV model, the proposed roads should be built on a BOT (build, operate and transfer) basis.

In such cases, the extant support mechanisms like `viability gap funding' should also be available wherever required.

The Finance Ministry was also setting up an SPV for funding such projects by extending long-term loans.

All those projects for rail-road connectivity, where the internal rate of return (IRR) is less than the minimum prescribed, would be considered on a case-to-case basis.

Road projects: The sources said road connectivity projects might be divided into two categories — port connectivity projects where the length of the road is not very long (less than 50 km) and hinterland connectivity projects where connectivity to the source of cargo, such as iron ore mines/coal mines, is to be provided.

The schemes for executing port connectivity would be undertaken by the NHAI on a BOT basis and these may be categorised as National Highways (Port Connectivity).

Even as all NH (PC) projects would be taken up by the NHAI as per normal parameters, a separate tolling policy for NH (PC) could be proposed jointly by the NHAI and Shipping Department wherever necessary.

Rail projects: On rail projects, it said that for Ennore Port connectivity, in view of the proposed Iron Ore terminal and container terminal at the port, the Railways might get the traffic projections updated in consultation with Ennore Port to determine the viability of the project afresh. This could be completed in the next six months.

Even as the IRR for Mumbai port is - 2 per cent as per the current survey, the CoS felt that if the proposed container terminal prospective traffic is factored into the traffic estimate, the rail connectivity project could be flagged off. As for the need for rail connectivity to Vallarpadam, it was recommended that after a feasibility study is completed, it could be considered for funding it as a national project, since the proposed International Container Transhipment Terminal is proposed to be set up within four years from now.