Gujarat Maritime Board - Journey from Start to Stars...
V. P. Shah
Ex- VC & CEO
Gujarat Maritime Board
India has a strategic location in the Indian Ocean with a coastline of more than 7500 kms with 13 major ports and about 200 non-major ports. Gujarat State has an additional advantage since it has about 1/4th coastline of the country and is geographically closer to the Middle East and European countries by sea distance. At the same time, Gujarat is located at a place where it can cater to about 1/3rd of Indian industrial states such as Rajasthan, part of Uttar Pradesh, Delhi, Punjab, Haryana, Jammu & Kashmir and Himachal Pradesh, over and above catering to its own industrial centers. In spite of such benefits naturally available to Gujarat, why did the State ports not develop up to the desired level up to 1982? Let us analyze:
Firstly, Government policy kept the port sector mainly with public sector. Private investors were not allowed to invest in port infrastructure or port facilities. Moreover, due to rigid economic policies of import and export, the industrial progress of the country was very slow.
Talking about the ports, ports before 1982 did not have enough draft to accommodate the modern ships and their requirement. Lack of mechanization led to high turnaround time of ships that ranged from 20 to 30 days compared to their western counterparts where a ship of 50000 to 60000 DWT was evacuated in a day or two. This led to increased cost of the ship days and freight charges for the industrial community. Lesser draft and lack of direct berthing facilities made it difficult to handle container ships at Gujarat ports. Moreover, handling cargo by lighterage method lead to high cargo losses. Lack of expertise in dredging could not help in keeping required draft in the harbor area.
Many ports in Gujarat remain closed during south-west monsoon due to non-protection from south-western winds / waves. Another reason was the lack of proper rail and road connectivity within the state itself as well as the hinterland leading to increased time in cargo evacuation.
Government of Gujarat took one radical step that changed the scenario of Gujarat Ports sector. The step led to the birth of Gujarat Maritime Board – which can be called as first step towards making Gujarat ports more proficient and efficient. Gujarat Maritime Board (GMB) was formed in 1982 as the first autonomous State Board of Gujarat to develop, facilitate, administer and regulate the Gujarat's non major ports.
Gujarat became the pioneer in encouraging public private partnership in the Port sector and developed the concept of port liberalization utilizing the same to become India's fastest-growing maritime state. Gujarat Maritime Board experimented with different forms of privatisation devising multiple port privatisation models to promote private participation in Gujarat ports leading to enhancement of the capacity of the ports at the same time making them revenue generators for the state.
Gujarat Maritime Board rolled out Captive Jetty model from 1985 which allowed the port based industries to develop their own jetty to cater to their import-export requirements. The industry was given a concession in wharfage rates to be set off against the cost of the construction of a jetty. In view of this proactive step of the Government, many private sector companies developed their captive jetty facilities in Magdalla, Hazira, Mul-Dwarka, Jamnagar, Sikka and Dahej. Before the introduction of captive jetty model, the traffic of Gujarat ports, in last 20 years up to 1985, was very low ranging between 2 to 3 million tonnes per annum. With the rolling out of the captive jetty model, the traffic shot up to 13 million tonnes by 1994-95. Today a total of 24 captive jetties/SPMs dot the coastline of Gujarat.
As a part of short-term development strategy, existing port facilities were offered to private companies to develop through private investment under the private jetty model developed by Build-Operate-Transfer mode. The aim was to handle cargo through mechanized handling system and to increase efficiency of operation. The private jetties are granted permission for a lease period varying from 5 to 25 years depending on the quantum of investment. Presently there are 12 operational private jetties at different locations in the state and there are various future proposals for further development.
The success of the above models led Gujarat Maritime Board to further amend and add additional models in 1995. The State rolled out Port Policy in the year 1995 after liberalization of economic policies of Government of India. This policy spelled out an explicit strategy of port-led development, including the proposal for creation of 10 completely new, world-class ports, with dominant private-sector participation. The formation of this Policy can be called as a breakthrough step completely changing the scenario of Port development.
The objectives of the Port Policy of 1995 were as under:
- To remove the hurdles in developing green-field ports on PPP (Public Private Partnership) model.
- To select new sites of the ports in such a way that minimum transportation is required for the industries located in the area and connectivity to the national rail and road network was available.
- To develop ports that would provide draft of more than 15 to 16 meters to accommodate modern ships.
- To identify new coastal sites with enough land available for providing supporting infrastructure.
- To decongest the overburden on existing major ports on Western India to cater to the needs of increasing traffic of western and northern States, by providing efficient facilities and services and to support the country's domestic and international trade. The type of cargo breakup of major ports in India was studied and the policy was framed in such a way that such cargo can be catered at Gujarat ports.
Summing up the objectives of Port Policy, it can be said that, it envisaged an integrated port development, consisting of creation of port facilities, industrialization and development of infrastructure facilities like roads and railways in the hinterland, identifying various parameters related of development and increasing Gujarat's share in the export and import sector in national and international trade & commerce, in pursuance of liberalization and globalization policy.
Formation of Port Policy, lead to an unprecedented proliferation of private investment in ports. GMB consistently supported private sector ports through a proactive regulatory stance by facilitating establishment of road and rail linkages. GMB opened up a range of services for privatization including tug services, lighterage operations, crane services, landing and shipping services, pilotage and patrolling boats for complying with the ISPS code. Accordingly, port services are now offered by private companies not only at the newly developed private terminals and ports, but also at the existing GMB ports. This step significantly enhanced port efficiency and competitiveness among port service providers.
GMB came out with various models for private sector investments which have witnessed investments in private ports on "Build Own Operate and Transfer" (BOOT) model, private jetties in "Build Operate and Transfer" (BOT), captive jetties in "Build Operate Maintain and Transfer" (BOMT) and sharing mechanism with "Special Purpose Vehicles" (SPVs) to provide broad gauge rail linkages between important ports.
It is a well know fact that any policy fructifies after a certain period of time and Port projects as such require a gestation period for necessary approvals from State and Central Government. Port Policy of 1995 began delivering results by 1998 in the form of increased traffic at Gujarat ports. The fruition of these proactive measures manifested in the accelerated growth of the port sector and Gujarat currently boasts of the highest number of operational ports for handling varieties of commercial cargo. The overall port capacity of GMB ports has registered growth of 110.37% i.e. from 135 million metric tonnes per annum (MMTPA) in 2001-02 to 284 MMTPA in 2010-11. As a result of the new capacity augmentation projects in the pipeline, the capacity of the GMB ports is expected to double by the year 2015. The traffic of the Gujarat ports has also increased exponentially from 73 million tonnes in the year 2001 to 231 million tonnes in 2010-11.
Gujarat Maritime Board administered Gujarat Ports currently account for nearly 25% of the national cargo and about 80% of the cargo handled by the all non-major ports of the country. Private investment to the tune of Rs.24,000 crores has been invested in the port sector so far.
Another most important aspect for the success of the ports is its connectivity. Connectivity with national network of railways and roads is a very important factor for over all development of Port sector. This aspect was taken very seriously by Government of Gujarat and steps have been taken to implement the same. Out of 4 ports which are already developed on PPP model i.e. Pipavav, Mundra, Hazira & Dahej, the port of Pipavav & Mundra are already connected to with national network of railway & roads. Steps are being taken to provide to railway connectivity to remaining ports of Dahej & Hazira. Dahej Bharuch Rail Company Ltd. has been formed to provide connectivity to Dahej.
Also, in view of developments of different investment/industrial regions in the Gujarat state and taking account the movement of freight along the DFC & to Gujarat ports, Gujarat Maritime Board (GMB) in consultation with Gujarat Infrastructure Development Board (GIDB) has prepared infrastructure Master plan for strengthening the rail and road for DIMC/DFC. In addition to this GMB has also prepared the rail & road linkages required for the new /existing ports to taken up under DMIC/DFC. Thus, providing connectivity to ports is one of the top priorities of Gujarat Maritime Board focusing on providing seamless opportunities for multi-modal transportation.
Situation at Major Ports today:
Let us look at the current situation at Major ports today. Major ports of India are grappling with problems in developing new models in view of inherent deficiency in the system. There is shortage of land for storage of bulk cargo or containers. Adding to the situation, nearby land areas are very costly hampering new industrial development. Moreover, problem of lesser draft is also being faced by them.
In view of the above deficiencies at the major ports, other maritime states i.e. Maharashtra, Karnataka, Andhra Pradesh and Orissa have started following Gujarat's paths rolling out policies of new development on various PPP models.
It has been noticed that India's major ports' annual growth is about 8 to 10%, while the annual growth of Gujarat Ports is 18 to 20%. Not only the traffic and income of the Gujarat Maritime Board has been on the rise, but industrial growth of the State in many ways has accelerated aiding the development of backward coastal areas of Gujarat.
At a time, when other states could not capitalize on the benefits of economic liberalization, Gujarat went against the tide and turned the wheels of fortune gaining success for itself and reaping huge benefits. The enormous success of Gujarat ports today is the result of proactive governance and timely initiatives taken by Gujarat Maritime Board. Gujarat Maritime Board has through its journey achieved several milestones converting the non-major ports of the state into some of the biggest ports in the country, achieving highest traffic volumes of all non-major ports, adding new capacity to its coastline year by year and taking Gujarat ports to unprecedented heights. It can thus be very aptly said that through this journey Gujarat Maritime Board has taken itself from start to stars.
V. P. Shah
Ex- VC & CEO,
Gujarat Maritime Board