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The decision related to the disinvestment of the Bharat Petroleum Corporation Limited (BPCL) may trim down the Centre’s financial burden. But it could also sound the death knell for another government entity – Cochin Port Trust -- which depends mainly on Kochi Refinery of the PSU oil company for increased cargo throughput and revenue.
The cabinet decision on divesting BPCL shares has triggered alarm bells in the shipping circles, as they fear that the move could affect the prospects of the port which had received crude shipments upon commissioning of the Integrated Refinery Expansion Project for quality upgrdation of auto fuels.
Today, the port is handling 32 million tonnes of cargo, of which crude and petroleum products constitute an estimated 65 per cent.
The Kochi Refinery was instrumental in facilitating a turnaround of the port by clocking a net profit of Rs 19.18 crore in 2018-19, after incurring losses for a consecutive preceding years.
The BPCL divestment plans would have a ripple effect on the port’s business outlook as well, as any future increase in crude traffic would solely depend on the new investor’s decision on capacity expansion, shipping circles say.
According to industry sources, BPCL-Kochi Refinery had raised its handling capacity to 15.5 million tonnes from 10 million in 2017. The refinery has also been handling exports of close to three million tonnes of products but a subdued demand had made that business a loss. “If the private investor intends to reduce the crude intake in order to slash their production cost and raising the profitability, it could have an effect on crude arrivals, thereby affecting the revenue of the port”, sources added.
P M Mohammed Haneef, President, All Inidia Port & Dock Workers Federation told BusinessLine that the disinvestment decision of the oil major is suicidal and detrimental to the interests of Cochin Port Trust. Kochi Refinery is the main user of the port and has been instrumental in bringing more revenue and cargo. “It is a question of our very existence. Over the years, the port had made investments for setting up facilities such as Cochin Oil Terminal and berths to handle petroleum products,” Haneef said.
He also recalled the joint agitation led by trade unions to retain the crude handling facility -- Singe Point Mooring -- within the port’s geographical boundaries, when the Refinery management had proposed to shift its location outside the port area.
“The future of Cochin Port Trust is uncertain, as the disinvestment decision might affect cargo and revenue and nothing can replace it”, remarked a source in the port sector. However, it is a policy decision and the port has no role to intervene. The potential investor can choose to either augment or reduce the refining capacity in the Kochi or depend on other refining units taken over by them for their business requirements.
Asked whether the port has explored any alternate stream to mop up the business, the source said “FACT's move to increase cargo throughput may improve the situation even though it will not match with BPCL.
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