‘MbPT is a multipurpose cargo handling port serving this hinterland’

Ravi M Parmar,
Chairman, Mumbai Port Trust (MbPT)
Mumbai Port has long been the principal gateway to India and has played a pivotal role in the development of the national economy, trade & commerce - caters 10 per cent of the country’s sea-borne trade handled by Major Ports of the country in terms of volume. Ravi M Parmar, Chairman, Mumbai Port Trust (MbPT), details on the port’s strength, unique competency to cope with changing pattern of maritime trade, future expansion plans, etc in an exclusive interaction with Rakesh Roy. He also shares his view on constraints that result in inadequate share of coastal shipping to trade activities in the country, FDI & private sector participation in port development, Cabotage Law, Government policy, etc.

The performance of non-major ports in cargo handling has been elevating since last few years. Major ports have been showing dismal performance. May we have your comments, please?
I partially agree with the statement in so far as it relates to elevating performance of non-major ports. In the last decade, Indian Port Sector has witnessed certain structural changes and the State owning major ports have given way to greater private participation in this sector. Maritime Agenda 2010-2020, issued by the Ministry of Shipping, has set a target capacity of over 3,130 MT by 2020, largely through private sector participation and more than 50 per cent of this capacity is expected to be created at non-major ports.

However, in 2013-14, twelve State-owned major ports handled about 58 per cent of the country’s trade by volume shipped by sea. This includes crude oil, coal, container cargo, fertiliser, all aggregating to 555.49 MT, which was 1.8 per cent more as compared to 545.83 MT of the cargo handled by major ports in the previous year. To site an example, in 2012-13, Kandla Port created national history by handling 93.62 MT cargo recording 13 per cent increase over its last year traffic. Considering the fact that cargo-handling capacity of Kandla Port was 92.02 MT, handling 93.62 MT of cargo was not dismal by any means. Mumbai Port Trust also handled record traffic of 59.18 MT in 2013-14.

In 2012, The Government relaxed Cabotage Law for Vallarpadam terminal allowing foreign owned and foreign registered container ships to carry cargo between Indian ports. Do you expect the Government should give such relaxation in Cabotage Law to other Indian Ports also? If ‘yes’, how will it help to boost Indian Shipping sector?
Aside from the Cabotage Law, there are several factors which result in inadequate share of coastal shipping to trade activities such as double handling cost, import duties on bunker oil and spares, high manning scale which increases operational cost, stringent specification for vessel construction leading to higher capital cost, competing rail and road transport, lack of separate facilities at the ports for coastal cargo, etc. As far as Cabotage law is concerned there are countries in the world, for example South Africa, where there is no Cabotage Law. However, coastal shipping there could not achieve desired results. To give boost to the short sea shipping, it is necessary to address the issue holistically.

What are the current biggest challenges ahead for major ports in India? What strategies have you undertaken to maintain the positive growth momentum?
The biggest challenges ahead of major ports can be summarised as capacity constraints, low level of mechanisation, low pace of project execution, lack of last mile connectivity, unavailability of specialised berthing, shallow drafts etc. At the Port level, expansion projects and green field projects are envisaged to deal with these bottlenecks.

Foreign investment in port sector has declined in last few years despite of 100 per cent FDI in the sector. According to you, how will PPP model boost the infra development in the port sector?
PPP projects were introduced in the Indian port sector in the late 1990s to increase the capacity. Private sector participation was expected to result in improvements in the operating efficiency and performance standards. The Govt. of India allowed 100 per cent FDI for port development projects. Between April 2000 and January 2014, Indian Ports reportedly received FDI worth USD 1635.40 million. It is true that the progress of PPP Projects in the country has not been up to the expectations. This can be attributed to the various impediments at Pre and Post award stages. The problems at the pre-award stage were mainly lack of clarity on the bidding framework, pre-qualification criteria, concession terms etc. At the bidding stage, there have been instances when the tenders were discharged and re-invited due to procedural issues. At the Post-award stage, time taken to get environmental and other statutory clearances was high and post commissioning the BOT terminal faced operational problems because of their high dependence on port trust for common facilities like capital dredging, pilotage, vessel movement which affected their efficiency.

Success of PPP project in port sector depends on the way these issues are addressed. Of course, some progress has been made and to address the pre award stage problems ‘model documents’ have been framed. Besides this, Regulatory and Policy initiatives have been taken to clear the bottlenecks, such as passing of Land Acquisition, Rehabilitation and Resettlement bill 2011 to remove impediments in land acquisition by empowering the Govt. to acquire land on behalf of private party taking up public project like those in railway, port, and power sector. However, viability of port projects also depends on other strategic considerations like cargo potential, extent of handling infrastructure, draught and land cost.

No doubt the port sector has undergone considerable change since the 90s in terms of trading pattern. Then how is MbPT executing its strategies to cope with the changing needs of maritime trade?
If you look at the cargo composition of the world trade, you would notice a tripod with almost equal quantity of containerised, dry bulk and liquid bulk cargo. Dry bulk trade is on the rise after 2013, having seen the second highest contracting trend after 2010. The position for the near future looks promising considering various factors like the increase in the US grain production, coal-based electricity generation in Japan and the reports of the European Economic recovery. The dry bulk fleet is also expected to grow by less than 5 per cent per year up to 2020.

Mumbai Port Trust is a multipurpose cargo handling port serving this hinterland. It is a traditional comprehensive port designed to handle bulk cargo. The port, however, has successfully adapted to changing shipping needs and cargo packaging from break bulk to unitisation/palletisation and containerisation. Besides this, it has also developed specialised berths for handling POL and chemicals. The Port is looking forward to raise its bulk handling capacity through different projects in the pipeline as well as on the design board. The Port is also envisaging handling of bigger sized panamax vessels in its anchorage area. The Port is equipping itself to handle containerised cargo through its OCT project, execution of which, of course, is delayed for some reasons but will hopefully be complete soon.

MbPT is considered as the principal gateway to India’s International & National trade, caters almost 10 per cent of the country’s sea-borne trade handled by major ports of the country in terms of volume. Can you please tell us the USP of the port (Please share the cargo handling capacity, storage capacity, dry-dock etc. of the port)?
Presently the Port has 26 cargo berths including BPS at Indira dock complex. It also has 4 berths for handling POL at JD, 2 berths for chemicals at PP, passenger cum cargo berth at BPX, 2 berths for ferry ships at new ferry wharf. Its total cargo handling capacity is 49.25 MMT. Extensive facilities are available for storage of cargo in the docks and outlying areas. Pre-shipment storage facilities have been accorded to all types of export cargoes.

The Port has approximately 270,000 square meters covered space and 500,000 square meters open space besides 6000 slots for containers. The liquid storage capacity of the Port is 490,000 KLS approximately. The Port also has a dry dock in its Indira Dock Complex with length 304 meters and beam 30 meters approx. The existing facilities at this Dry Dock provide all major services for repairs to the ships. Specialised berths for handling POL and chemicals caters to nearly one fifth (about 19 per cent) of POL Traffic handled by all the Major Ports in the country. These multipurpose cargo handling and ship repair facilities at the port are its USP.

What are the future plans of MbPT in terms of cargo & storage capacity expansion, dry-dock & dredging enhancement. Tell us about the new projects in pipeline and how will manage the finance for the same?
Construction of off-shore container terminal berth, Redevelopment of Harbour Wall berths, Construction of Second berth for handling liquid chemical/specialised grades of POL off New Pir Pau Pier, Improvement of Rail connectivity are some of the on going projects.

Besides this, the port is concentrating on developing facilities such as Deepening/addition of anchorages, developing bunkering facilities, developing FSRU terminal, mechanisation of mid sea operations by employing floating cranes etc. which would add to the cargo handling capacity of the port without putting any additional burden of vehicular traffic on the otherwise busy city roads.

What changes would you like to see in Government policy on port sector? What are your expectations from the forthcoming Union Budget?
The Government of India has allowed 100 per cent FDI for port development projects. A 10-year tax holiday has also been given to enterprises engaged in the business of developing, maintaining and operating ports, inland waterways and inland ports. The Cabinet Committee on Economic Affairs (CCEA) has approved five projects involving an investment of over ` 17,630 crore (USD 2.93 billion) to increase the capacity of major ports. Of the five projects approved, four are container terminals and one is a multi-purpose cargo berth project in Mumbai Port.

It is well-known that India’s expenditure on logistics activities is one of the highest in the world equivalent to 13 per cent of GDP, higher than that of developed countries like US (9.9 per cent), Europe (10 per cent) and Japan (11.4 per cent). This is due to combination of many factors like industry fragmentation and infrastructure facilities. The competitiveness of an export-oriented sector is adversely affected by inefficiencies in the logistics cost due to inadequate infrastructure facilities. This area needs strategic attention to boost country’s EXIM trade.

Port performance in the last year.
Registering an increase of 1.14 MMT over previous year, Mumbai Port handled all time high 59.18 MMT of cargo in the year 2013-14. This mainly comprised 60.8 per cent POL and Chemical, 23 per cent general cargo and 16.2 per cent stream cargo.

Comments on the Port’s 142 years symbiotic relationship with the city of Mumbai.

Mumbai Port has so far been known mainly for its multipurpose cargo handling facilities. However, in order to make port more city friendly and create synergy with city, Mumbai Port Trust is planning some projects to cater to the leisure, traffic, water transport, water sports, entertainment, etc. needs of the city. This will include projects such as Marina, Floatel, Floating Restaurants, Entertainment Zone at Marina Bay, etc.