Ports hit by capacity crunch

Indian ports, which handled about 560 million tonnes of cargo last fiscal, will be required to handle a throughput of 1,600 million tonnes by 2025-26, as per Government estimates. Independent forecasts peg the capacity requirement at a higher level of 3,000 million tonnes by 2020. But is the Indian port sector adding capacity at a pace matching the demand? Sadly, no.

Even though expansion is taking place, the pace is relatively tardy due to a variety of factors. The National Maritime Development Programme has laid out ambitious plans for development of ports, but a significant part of the proposals are yet to take off.

Under the programme, 276 projects were proposed up to 2011-12, envisaging an investment of Rs 1,00,339 crore based on 2004-05 prices. Of this Rs 55,804 crore is for the port sector and the rest for shipping and inland water transport sectors. But, out of the 276 projects, about 55-odd projects involving a capacity of about 70 million tonnes are complete, while about 80 other projects are under implementation. Thus, a bulk of the proposed projects, even after some 25 were subsequently dropped, is yet to take off.

Even a Parliamentary Committee on Estimates in its recent report has noted “with dismay” that the Government has not been able to create adequate capacity. “The committee fails to understand as to why not even 25 per cent of the targeted projects could not be achieved under the NMDP,” the report points out.

Analysts feel that a bulk of the projects will not be able to meet the 2011-12 deadline and will have to be carried forward to the subsequent Plan Periods. Several major projects have missed the deadline —for instance, the second chemical berth of Pir Pau, Mumbai, was originally scheduled for completion by March last year, but it may not be operational before mid-2012.

INFRASTRUCTURE

International norms have it that a gap of at least 30 per cent should be maintained between installed capacity and actual throughput. But the gap is about 8 per cent in the Indian ports sector, which is leading to substantial increase in waiting time for ships and a strain on the infrastructure, including cargo handling equipment.

Even though Indian ports have improved in terms of different productivity parameters, the existing levels are significantly below those of most of the world's biggest ports.

The Parliamentary Committee, in its report, has pointed out that the average turnaround time had improved from 10.10 days in 1990-91 to about 3.85 days in 2008-09. But, still the domestic port sector needs to cover significant grounds in shortening the turnaround time through improved cargo handling technology. For instance, the average turnaround time at Hong Kong port, which handles only container traffic, is 10 hours.

One of the biggest problems facing Indian ports is draft — inadequate draft prevents some of the ports from handling bigger ships.

While the State-owned Dredging Corporation of India (DCI) has not been able to add the required capacity, even most of the ports do not have adequate dredging capabilities. And this is paving the way for foreign dredging companies to take up a significant portion of the domestic dredging works.

The Parliamentary Committee feels that ideally DCI should have 1.5 times more capacity than the actual requirement so as to accommodate breakdown or maintenance of dredgers.

PRIVATE PARTICIPATION

One positive development has been the increased participation by private players in the ports sector. Last fiscal, about 13 PPP projects have been awarded, involving an investment of Rs 2,653 crore and a capacity of 65 million tonnes.

These include the mechanised coal handling facility at the general cargo berth at Visakhapatnam port and setting up of mechanised iron ore handing facilities at New Mangalore port.

Clearly, given the current trade growth rate, the domestic ports sector should hasten the process of capacity addition in order to meet the requirement in the next decade.