Public-private projects in Vizag port in dire straits

The Visakhapatnam port has taken up several projects under the public-private partnership (PPP) model during the past six to seven years to increase its capacity, improve efficiency and face competition from private ports in the vicinity such as Gangavaram.

However, some of the projects in the public sector port are now facing the heat due to adverse market conditions as well as a rigid tariff structure imposed on the major ports by the Tariff Authority for Major Ports (TAMP).

Vizag general cargo berth in the outer harbour was awarded in 2010 to the Vedanta group for a period of 30 years under the PPP model and a fully mechanised cargo-handling berth was built at a cost of ₹640 crore for coking coal and steam coke.

The major project with a 10-million tonnes per annum capacity is now in a crisis, as it is unable to compete with the neighbouring Gangavaram port, “as the differential and flexible terms offered by the private port have eroded the competitiveness of our terminal,” says Manish Gupta, head of ports, Vedanta Ltd.

According to Gupta, the abnormal storage charges are making cargo-handling uneconomical at the general cargo berth in Vizag port and importers are preferring Gangavaram, “as the private port is offering them free storage for 90 days as against only 10 days at our terminal in accordance with TAMP guidelines”.

He said that PPP projects under the 2008 tariff regime of the TAMP in particular are facing great difficulties. Three other berths in the port under the PPP model, built by the Adani group, SEW and Alba, are similarly in dire straits. Pleading for a level playing field, Gupta has said, “The TAMP should offer us some relief at least as far as storage charges are concerned and the free storage period for cargo should be hiked to 90 days. We have represented the matter to the TAMP and the ministry.”

The Vizag general cargo berth, capable of handling the cape vessels, started operations from 2015-16. In 2015-16, it handled 6.9 million tonnes, 4.26 million tonnes in 2016-17, and 1.4 million tonnes till the end of July during the current financial year.

The corresponding figures for Gangavaram port are 10 million tonnes, 7.6 million tonnes and 3.56 million tonnes.

“It is such an unequal battle, we are not even operating at 40 per cent capacity, though we have an excellent terminal and are second to none in operational efficiency,” he said and urged the TAMP and the ministry to rescue the project, which otherwise is likely to become a non-performing asset.