The Hindu Business Line : Inland water transport: In dire straits

IN 2004, the Inland Waterways Authority of India (IWAI), in a bid to promote private sector participation in inland water transportation (IWT), mooted a proposal to a private barge company for transportation of asphalt from Indian Oil Corporation's refinery at Haldia (West Bengal) to Pandughat near Guwahati (Assam) by the river route that passes through Bangladesh. The company readily agreed, only to regret subsequently. The venture proved too costly for the company, forcing it to abandon the services after doing four trips though the cargo inducement was enough for both directions.

The Haldia-Pandughat round trip, it was estimated, would take at most 45 days. But in reality at least one trip took more than 100 days and never less than 60 days. For various reasons. The flood in Assam was one; but the other more important factor was the lack of infrastructure.

The loading and unloading of cargo took much longer than estimated. As a result, the vessels — two acquired by the company on lease from the state-owned Central Inland Water Transport Corporation and one from the IWAI — were detained for an inordinately long time.

The detention threw up a host of problems, all entailing a huge loss for the company. This single instance is symptomatic of the ills of the IWT sector; enough to suggest why everything is not hunky dory on the IWT front despite the government's tall claims of success and the grandiose plan to push it further.

In the next few years, several thousand crores of rupees are proposed to be spent for the development of National Waterways including infrastructure, construction of jetties with mechanised handling systems, dredging for increasing the depth of the rivers and so on. But those actually engaged in river transportation are not sure if the government's professed objective — to step up the share of IWT in the country's total trade from the present one per cent to five per cent — will at all be achieved during the stipulated period.

The scepticism may not be without reasons. The most pertinent question which haunts everybody associated with IWT is: Why are entrepreneurs not flocking to take advantage of the plethora of incentives being provided. Take for example the investment subsidy. For construction of a barge for operation on the National Waterways, the government will provide a 30 per cent subsidy. A 1000-DWT barge is estimated to cost around Rs 3 crore. The subsidy component therefore will amount to a little less than Rs 1 crore. In other words, the promoter will have to fork out the balance Rs 2 crore or so.

Unfortunately, few promoters are convinced that such an investment will guarantee a fair return. The cargo inducement is uncertain and the cost of operation high, particularly in view of the steadily rising fuel prices. The poor navigability of the channel in the rivers slows the vessels while the absence of night navigation facilities virtually doubles the time taken for covering a distance.

An efficient transportation system presupposes faster turnaround which is not possible in IWT in its current shape. Capping it all, inadequate terminal facilities and the poor connectivity between the terminals and the highways, State or National.

The North-East poses an additional problem. Since the route to the region is through Bangladesh, the approvals of the authorities concerned of that country are necessary. All this takes time and delay means cost.

As a cumulative effect of all this, to the shipper, the total cost of transportation by the IWT vis-à-vis other modes is not really advantageous as is made out to be. Remember, IWT has also to compete with the formidable road transport sector.

Then there are certain localised problems: For example, the construction of pipeline between Haldia and Budge Budge by Indian Oil Corporation has affected the barge movement of the petroleum products on the route. The Kolkata Port Trust has installed a virtual jetty off Sagar Island at an estimate cost of Rs 10 crore to facilitate lighterage operation involving deployment of barges. However, the operation is yet to start on a regular basis as the right types of barges are not readily available.

The jute industry being in a bad shape, export of jute goods too has dropped and with it the barge movement of jute goods from the mills (mostly located on the Hooghly) to the Kolkata port. As a result, only about 150 or so barges are now in operation in the Hooghly, including those engaged river transportation to Assam and the North-East, as compared several thousands vessels a couple of decades ago.

It may be interesting to note that the Bangladesh flag barges now account for the bulk — an estimated 80 per cent — of the trade undertaken by the river route between the two countries, although as per the protocol, the trade should be shared equally by the river transport operators of the two countries. There are just not enough barges with Indian flags available for participation in the bilateral trade. Worse, those available are unable to compete.

Of late, major barge companies are sore over what they call the government's indifference to their demand for extension of the benefits of tonnage tax also to them. Right now such benefits are available to vessels registered under the Merchant Shipping Act 1958, that is, ocean-going vessels, as also dredgers.

However, the IWT vessels — those registered under the Coasting Act, 1838 and IV Act 1917 — have been left out. It is double whammy for the barge companies: The benefits under Section 33A of the Income-Tax Act have been withdrawn while that under the tonnage tax have not been made available to them.

Only recently did the IWAI invite bids from private firms keen on floating joint ventures for acquisition of vessels, construction of jetties on BOT basis and running of services on the National Waterways. The initial response, it is learnt, is not encouraging.

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