The Hindu Business Line : ‘Investment plans may have to be recast based on economic situation’

I’m confident the port sector can handle the challenge of burgeoning trade, especially because the bulk of the new capacity in the port sector will be created by private initiative or through the public-private partnership mode.

A.P.V.N. SARMA, SECRETARY, DEPARTMENT OF SHIPPING

Santanu Sanyal

Mr A. P. V. N. Sarma, 1974-batch officer of the Indian Administrative Service belonging to the Andhra Pradesh cadre, took over as Secretary, Department of Shipping, in February 2008. In an interview to Business Line recently, Mr Sarma discussed the various challenges facing the country’s port sector.

Excerpts from the interview:

Which issue relating to the country’s port sector is receiving the government’s attention most?

The issue currently receiving most attention is how to meet the myriad challenges to be thrown up by the projected growth of the economy. The government wants the port sector to cope adequately with the burgeoning requirement of the trade.

How confident are you about the sector’s ability to meet the challenges?

I’m very confident because the bulk of the new capacity in the port sector will be created by the private sector, either through PPP (public private partnership) mode in existing major ports or in new ports being developed by the private sector itself. Even in the matter of acquisition of equipment, the PPP model can work. Kolkata port provides the example and the experiment, I suppose, is giving results. But then I have a concern.

What is that?

Let us hope that the current global meltdown does not persist. The next two to three months are going to be critical for us. We’re watching the situation. If, God forbid, the present situation does not improve, the investment programmes for the port sector might have to be recast and re-prioritised. Last year, the traffic growth in major ports was 12 per cent and we were hoping to maintain the same rate of growth in the current fiscal also. The growth in the first half, however, was a little over 7 per cent due to several factors, such as the fuel price rise, jitters in the commodities market and the less than satisfactory growth in iron ore exports.

We sincerely want the situation to turn for the better soon. After all, the performance of the port sector depends largely on the international trade situation.

What is the size of new addition to port capacity?

Right now the major ports together have a total capacity of about 500 million tonnes (mt), to be stepped up to 1,000 mt by 2011-12, and the private sector ports, currently having capacity of 200 mt, are likely to add capacity to reach the level of 500 mt by 2011-12 so that by the end of the Eleventh Plan, the country has a total port capacity of 1.5 billion tonnes.

What kind of policy initiatives will be needed to achieve this?

Nothing specific, because the policy objectives have been already clearly spelt out in the National Maritime Development Programme. But we are planning to give greater autonomy to major ports.

More autonomy?

Yes, in the matter of financial powers. We’re considering applying to major ports the same guidelines already laid down in this regard by the Department of Public Enterprises for public sector undertakings.

What is your major headache?

There is no headache as such; we have challenges. For example, in addition to the creation of new capacity, we are keen to ensure more efficient use of the existing capacity.

How?

To improve its productivity, labour has to be aided with capital. There is scope for large-scale mechanisation of operations in the major ports. Hopefully, the PPP model will help achieve it. As I’ve already told you, the model could be applied in existing ports in matter of acquisition and deployment of equipment too, as has been successfully done by Kolkata Port Trust.

What about dredging?

Dredging is a major issue for us. Unfortunately, for whatever reasons, no proper dredging system has developed in the country.

How to handle it?

We are adopting a multi-pronged strategy to handle the dredging issue. First, we are examining how to revamp the operation of the state-owned Dredging Corporation of India. After all, it has acquired a certain level of core competence over the years. The problem it now faces is two-fold, the shortage of skilled manpower caused by exodus to private firms and the shortage of dredgers.

We’re trying to address both the issues. The DCI will be allowed to acquire more dredgers. Also, some incentive scheme is being worked out to retain people. We’ve also finalised new guidelines rationalising the norms of floating tenders for dredgers.

Does the government have reservations about deployment of foreign dredgers?

No blanket reservation. Yes, there are certain sensitive areas such as naval establishments and others where we have to be particular about deployment of foreign dredgers. Also, the government has reservation about certain foreign dredging companies, not all foreign dredging companies.

What has happened to the proposed mega alliance in dredging?

It is still under consideration but we would like go slow over it. Our priority is to boost the existing facilities already developed and to encourage local entrepreneurship not only in the matter of dredging operation but also in construction of new dredgers. We’re already in discussion with Bharat Earth Movers Ltd and Cochin Shipyard Ltd in this matter.

The declining draft of the Hooghly river near Haldia dock has been a matter of concern to the dock authorities and others?

The Union Government is fully aware of the gravity of the situation and is exploring all avenues to mobilise more dredgers to step up dredging in the Hooghly river.

The dredgers now under repair will be put back into operation soon and there is a proposal to charter dredgers to expedite dredging in the Hooghly.

What about diverting some of the DCI dredgers currently at Sethusamudram to Hooghly?

For some unknown reasons, the issue of diverting dredgers from Sethusamudram to Hooghly is receiving a lot of attention. The Government is committed to mobilise more dredgers; it is therefore unimportant to speculate over the source of these dredgers and their present status of deployment.

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