Ennore port undeterred by competition

T. E. Raja Simhan
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Several ports have come up in the vicinity of Ennore in the recent past. Some are in close vicinity. So, there is bound to be severe competition among the ports. We are keenly watching the developments and reshaping our strategies.

It’s been a decade since Ennore was declared as the 12th major port in India. With the advantage of being the country’s first corporatised major port, Ennore, which is located 24 km north of Chennai port, was conceived to handle thermal coal to meet the requirements of the Tamil Nadu Electricity Board.

Subsequently, it started handling other cargoes, such as oil, iron ore and cars.

Now there is growing threat from private ports like Katupalli, Krishnapatnam and Karaikkal taking away cargo. However, S. Velumani, Chairman, Ennore Port Ltd (EPL), does not feel there is a major threat from these ports.

In an interview with the Business Line, he discussed how the port performed in the last decade, and the road ahead.It’s been a decade since the port started? Are you happy with the progress made so far?

Initially, the port was conceived as a coal port and, hence, it was named as Ennore Coal Port Project.

But seizing the opportunities held out by the growth of the shipping industry, Ennore port took up the second phase expansion in which a new common user coal import facility, iron ore export terminal, liquid terminal, Ro-Ro terminal for automobile exports and imports was developed and commissioned during the last five years.

Thus, Ennore, which was just a coal port, has metamorphosed into an automobile export centre as well. That way, the progress witnessed by the port is certainly impressive and satisfactory.

Do you feel the port could have done much better with the advantage of being a corporatised port?

All the new cargo terminals developed in the last five years could be made operational according to the drawn up plan since the supporting infrastructure, such as dredging, rail and road connectivity, were put in place without delay. The port has already started LPG imports recently through the marine liquid terminal.

Further, the automobile export facility comprising the berth and a vast parking yard for cars were also developed by the port with its own resources, instead of public-private-partnership (PPP) format. All this has been possible because of the distinct advantage Ennore port enjoys as a corporate port.

Where do you see the port heading in the next five years?

The next five years will be an eventful period for Ennore port. We have lined up important projects such as LNG Terminal of five million tonnes per annum capacity, which will be developed by the Indian Oil Corporation.

We have already taken up the deepening of the port’s channel to 20 metres and corresponding depths of 19 metres in the entrance channel and 18.5 metres in the port basin, so that the port will be able to receive larger ships, especially the capesize vessels.

The process for construction of additional berths to meet the requirements of the Tamil Nadu Electricity Board (TNEB) or Tamil Nadu Generation and Distribution Corp (TANGEDCO) for more coal to their new thermal power plants that are coming up in the vicinity of the port has also been set in motion.

The Ennore port has plans to have a total capacity of 34 million tonnes for coal handling for TNEB/TANGEDCO by 2015-16.

We also hope to pursue the development of a container terminal. With thecommissioning of the container terminal, Ennore will be a full-fledged port in all respects.

The port will take up the dredging of the new berth areas and development of the rail road connectivity, especially the container rail yard and northern rail connectivity to ensure speedy evacuation of cargoes.

What will be investment?

In the 12th Five Year Plan the port has planned to incur a capital expenditure of Rs 1,000 crore.

Where will you source funds?

Funding of the capex has been from internal resources and commercial borrowings.

The Central Government has recently accepted EPL’s proposal to issue tax-free bonds for an amount of Rs 1,000 crore. This will be another major source of funding.

What is the status of the planned initial public offering(IPO)?

The proposal has been under study. Meanwhile, as the issue of tax-free bonds came up we thought it more appropriate to go for this option at the present juncture.

We feel that the IPO will be more appropriate and valuable after the commissioning of major projects, like the container terminal and the LNG terminal, by which time we consider that the best value of Ennore Port’s stakes would come out in full measure.

The container terminal project did not take off as planned. Do you feel it will have a big impact on the port?

The container terminal was an important project planned by the Ennore Port. In fact, EPL has been working on this project since 2002-03.

However, offering it as a PPP project and awarding of the concession got delayed due to various reasons. It was beyond the control of EPL’s management. Nevertheless, the port has been pursuing it undauntedly in spite of stiff competition and hurdles.

I may mention that the Ennore Port’s container terminal was envisaged to be a World Class facility by the National Maritime Development Programme. This will be a landmark project for Ennore port and will usher the port into a new era of progress and prosperity. Despite the best efforts of EPL, the project construction did not take off as the concessionaire could not succeed in sealing the financial closure.

However, EPL is still confident that this project, which is so important to the shipping industry and the trade will come up in the near future.

With private ports like Kattupalli, Krishnapatnam and Karaikal coming in quickly, do you feel they could be a big threat?

Several ports have come up in the vicinity of Ennore in the recent past. Some are in close vicinity. Some of the ports share a common hinterland, which is industrially fertile and ever growing.

So, there is bound to be severe competition among the ports. We are already witnessing it. But we are keenly watching the developments and we are reshaping our strategies so that EPL retains the competitive edge.

The inherent strength of Ennore port, in particular its corporatised set up, enables the management to adopt quick changes in the strategies and management styles and tone up administrative responsiveness.

Therefore, the competition will be challenging but we do not think that there will be a big threat for Ennore port in the future.

(This article was published on November 4, 2012)
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