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Paradip port's coal-handling unit -- Will there be steady traffic flow?

Santanu Sanyal

IF EVERYTHING proceeds on schedule, the huge mechanised coal-handling facility, being created at Paradip port with assistance from the Asian Development Bank, should be ready by May-June next year.

``We are hoping to start trial runs of the mechanised coal-handling plant from April,'' says Mr S. K. Mohapatra, Chairman of Paradip Port Trust (PPT), but keeps his fingers crossed at the same time. Not without reason, though.

IRCON, the wholly-owned subsidiary of the Indian Railways responsible for completing the railway network, is yet to finish the work. ``Of the nine bridges to be constructed by IRCON, two are yet to be completed,'' Mr Mohapatra says, adding that several o ther smaller jobs, too, are to be finished within the next few months. The civil construction is 60 per cent complete and the mechanical work nearly 90 per cent, he pointed out.

But it is not simply the unfinished structurals that are causing concern to the PPT Chairman. There are a few other issues that are proving worrisome. More than 850 contractors' workers, currently engaged in the manual handling of thermal coal at the por t, will be rendered jobless once the mechanised facility becomes operational.

These workers and their employers will not give up so easily. After all, PPT spends nearly Rs 80 crore every year on them. But it is also true that they all have to go. There is a Supreme Court order in this regard. ``I am preparing myself for a showdown ,'' observes Mr Mohapatra, but is confident that everything will be alright in the end.

The other major issue is cargo inducement. The coal-handling plant has a capacity of 20 million tonnes annually. Right now, the thermal coal throughput at Paradip port is less. In 1999-2000, the throughput was six million tonnes, and it was slated to exc eed seven million tonnes this fiscal. If the plant is to achieve viability, it has to have a throughput of at least 10 million tonnes annually.

An earlier projection suggested that the throughput would be as high as 13.5 million tonnes by 2001-02, 14.35 million tonnes by 2002-03, and 20 million tonnes 2003-04. But as the situation stands now, the 10 million tonnes of throughput can be achieved o nly if a portion of the traffic from other ports, particularly Vizag, is diverted to Paradip, says a PPT spokesman.

According to the PPT argument, ``Right now, TNEB pays an additional Rs 100 per tonne for rail transportation of coal from the Ib Valley to Vizag for coastal shipments. The extra cost could be eliminated if the cargo is routed through Paradip port in pref erence to Vizag port. Since Vizag port handles about three million tonnes of thermal coal annually for coastal shipments for TNEB, the saving would be substantial.

Also, a steady traffic of three million tonnes will help PPT achieve some return on the massive investment made in the plant. But will the Vizag port authorities agree to such a proposal? Doubtful. After all, three million tonnes is not a small quantity. ''

PPT, therefore, is toying with the idea of even handling iron ore in the coal handling plant. ``It will be a salvage operation under a contingency plan if the projected volume of thermal coal cargo does not materialise,'' observes Mr Mohapatra.

However, the success of such a contingency plan, too, will depend on several factors. First, the export prospects for iron ore. There has been a spurt in the ore export recently after a gap of several years. The present trend, therefore, has to be mainta ined, and the Minerals & Metals Trading Corporation (MMTC) must use Paradip port for routing the increased export. Next, MMTC has to make the Railways agree to provide an adequate number of bottom-opening-box N (BoB-N) wagons, needed for the movement of iron ore.

Perhaps, most important are the railway linkages for ore movement. Right now, ore for exports through Paradip is mined in the Gandhamardahn/Malanjtoli area in Orissa and transported by rail via Kharagpur (West Bengal), covering more than 500 km. This dis tance would be reduced by about 200 km, entailing a saving of Rs 150 per tonne on railway freight, if and when the Banspani-Daitari-Jakhpura railway link of the South Eastern Railway becomes operational.

According to SER sources, the railway network will not be ready before 2002/2003. ``Much will also depend on cargo inducement,'' the sources observe, pointing out that a throughput of at least 10 million tonnes is needed to justify the investment to be m ade for constructing the railway network.

Whether the mechanised coal-handling facility at Paradip will be able to attract adequate traffic or not will also depend on the tariff it will charge. PPT estimates that the proposed tariff will be Rs 170-190 per tonne which, it is pointed out, will be lower by Rs 100 per tonne from the present cost of about Rs 285 per tonne, consisting of Rs 65 per tonne of the port charge and another Rs 200 per tonne of handling charge payable to the private contractors. ``It will be a win-win situation for the user of the mechanised plant,'' observes the PPT Chairman.

The PIB approved Paradip port's mechanised coal-handling project on April 24, 1993, at a cost of Rs 587.41 crore, inclusive of an ADB assistance of Rs 402.41 crore, to be routed to the port through the Union Government by way of the budgetary support. Th e schedule of completion of the project was 60 months from April 1993, that is, April 1998. It is now anticipated that the project will be complete in March 2001 -- a delay of 35 months. The revised cost of the project is estimated at Rs 865.71 cro re.

As the situation stands, the viability of the plant will depend on several factors: the mines should be able to maintain regular supply of coal, the Railways should be able to carry coal from the mines to the mechanised handling plant at the port, the pl ant should be in operational condition, the ships should be readily available for coastal transportation and, finally, the Ennore port and others users should be in a position to receive the coal. Only the future can tell how many of these factors will b e fulfilled.

In the lead article on this page last Monday titled `Shrinking coal linkages: SER, ER exploring alternatives', the writer's name was inadvertently omitted. The author is Mohan Padmanabhan, of the Calcutta Bureau.