The Hindu Business Line : Delays hurting port prospects

Bureaucratic hurdles — in granting bidders security clearance, for instance — are delaying the start of work on the Rs 120-crore Mumbai container terminal project and hurting the port's initiatives to regain lost traffic.

It appears to be a classic case of how bureaucratic hurdles can blight a good business proposition. With the Government delaying security clearance for Hutchison Port Holdings' bid for the Rs 120-crore Mumbai container terminal project, uncertainty continues to dog the project. Indications are that some of the other 10 companies in the race may either back out or merge with their fellow bidders.

One of the bidders for the project told Business Line, on condition of anonymity, that although the Government had now extended the deadline till May 10, it is not sure whether it will be extended once again. "Clearly, the tempo is lost. It is quite an exercise to examine the project and arrive at a bid price, but if the deadline is extended repeatedly, all our calculations go awry," he said.

The Cabinet Committee on Security, which met in March to decide on the issue of security clearance to the Hutchison bid, referred the matter to the National Security Advisory Council (NSAC). Following this, the Government asked Mumbai port to extend the deadline for submission of bids from March 16 to May 10. Clearly, the project will suffer further delay.

Authoritative sources said the NSAC would be meeting shortly to examine the participation of Hutchison port in the Mumbai container project from the security perspective, before it submits its recommendation to the Government. The security issue has been raised due to the proximity of the proposed terminal to key naval installations in Mumbai.

Hutchison is one of the eleven companies in the race for the offshore container terminal project in Mumbai, the others being Mitsui OSK, P&O and Evergreen, besides Indian companies like L&T, Gammon India and the ABG group.

During the past few months, the last date for acceptance of bids was extended several times, mostly because of the issue of security clearance for Hutchison's entry. After the first pre-bid meeting with bidders, the bidding date was fixed as November 2, 2005. This was shifted to November 28 at the request of some bidders during the second pre-bid meeting in October.

But even after November 28, the last date has been extended several times at the Government's instance — first to December 15, then January 9, 2006, February 10, February 28, March 16 and now to May 10.

The project involves setting up two offshore container berths with a total length of 700 metres, with an option to the successful bidder to develop a third berth at a later stage with a quay length of 350 metres. The proposed berth will thus be bigger than the neighbouring JNPT's terminal (650 m), NSICT (600 m) and the third berth being built (712 m).

With the neighbouring two container terminals at JNPT registering significant growth in container volumes, the proposed Mumbai terminal has clearly lost out in the race because of the delay in grounding the project. In fact, even a third terminal at JNPT is coming up at a brisk pace and indications are that it will be commissioned as per schedule. "This means,the proposed Mumbai terminal will have missed the bus to a large extent," a port source said. The delay is hurting the Mumbai port and its initiatives to regain the lost traffic throughput.

Mumbai port, once India's premier port in terms of cargo movement, handled a throughput of about 43 million tonnes last fiscal — its highest ever. In the previous fiscal, it notched up 35.19 million tonnes.

The major drivers of the port's growth have been the increase in the import of petroleum products, coal and over-dimensional project equipment that go into setting up greenfield industrial units or expanding existing units, apart from the surge in car exports by Indian manufacturers. In fact, Mumbai port is the only port on the west coast that can handle such massive cargoes.

After touching a peak of 35.05 million tonnes in 1995-96, when it emerged as India's leading port in terms of throughput, traffic began to slump, touching a nadir of 26.4 million tonnes in 2001-02. Putting in place a sound come-back strategy, the Mumbai port began to regain lost traffic. It attracted traffic of 29.9 million tonnes in 2003-04, which went up considerabl to 35.19 million tonnes in 2004-05.

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