Most of the times, it so happens that any seminar of any industrial sector that gets organized talks either about the achievements and success stories of the sector or future plans of the industry or organization as a whole. Only a few atypical seminars get organized that talk about the problems or the challenges being faced by the industry as a whole. Talking about the shortcomings of the sector on an open platform is an uncommon sight. But this is what differentiates other organizations and Gujarat Maritime Board. Being the forerunner of the maritime sector of the country, we wanted to take the initiative of accosting the challenges that engulf the maritime sector of the country. And by maritime sector, we meant Ports as well as Shipping. Shipping sector has not really been touched upon in terms of the shortcomings and challenges being faced by it. To create a platform where these challenges of Ports as well as Shipping can be discussed and plausible solutions can be brought to the surface, a seminar was organized by Gujarat Maritime Board along with the Confederation of Indian Industries (CII) on the theme of “Ports & Shipping: Challenges and Way Forward” at Hotel Pride, Ahmedabad on 2nd July, 2012.
The theme of this event was aimed at creating an incipient of series of discussions on the challenges that plague Ports and Shipping sector and the solutions needed to overcome these challenges. The seminar sought to bring together distinguished speakers to analyze the various challenges facing the ports and shipping sector and to utilize their experience along with receiving inputs of the various stakeholders that had gathered at the event so as to formulate strategies for overcoming the critical bottlenecks in the sector. It also aimed to explore opportunities for private sector participation in creating the needed infrastructure to overcome these issues.
More than 350 delegates attended the conference. The event witnessed participation of senior government officials, port developers, logistics operators, maritime consultants and training institutions, equipment manufacturers, ports and terminal companies, as well as foreign delegates and speakers.
The conference flagged off in the august presence of high profile government dignitaries. Shri I.P. Gautam began by welcoming the audience and highlighted the apex position held by Gujarat in Ports sector while pressing on the fact that creation of more infrastructure and transport connectivity are major challenges today.
Mr. A.K. Joti, IAS in his Special Address observed the various bottlenecks being faced by Indian port sector today.
Shri Saurabhbhai Patel, Hon’ble Minister of State for Industries, Finance, Energy & Petrochemicals, Government of Gujarat in his Address as the Chief Guest for the event announced that in addition to highlighting opportunities for investors in Gujarat, VG 13 will provide a platform for various states of India and other countries to cooperate and explore attractive business opportunities.
Session I: Challenges in the Port Sector
The session about the challenges that are plaguing the Ports sector was chaired by Mr. L. Radhakrishnan, Chairman, Jawaharlal Nehru Port Trust. Mr. Radhakrishnan began his session talking about the success of Gujarat Ports sector and that Gujarat has created a model for other states to follow.
Maritime Agenda 2020 which envisages important role for PPP in creating more than 3000 MMT capacity by 2020 was emphasized by him along with mentioning the fact that actually only 1200 MMT capacity has been created till date. He thus noted that the onus for further capacity creation lies mainly on the non-major ports.
Challenges such as inefficient operations and handling; capacity creation; legal and procedural bottlenecks; low turnaround times; lack of connectivity and storage; labour disputes etc. were highlighted as the major critical challenges and bottlenecks faced by Ports today. It was suggested by Mr. Radhakrishnan that alternative means of transport such as coastal shipping and inland water transportation should be promoted inviting PPP along with larger Viability Gap Funding (VGF) by the Government. A significant observation made by Mr. Radhakrishnan was that the tariff guidelines of TAMP were harming private initiative and that the tariff cuts enforced on private terminal operators by TAMP were not benefitting exporters/ importers but were actually getting passed on to the international shipping lines. Hence, he suggested that this anomaly needs to be corrected since no authority similar to TAMP exists anywhere else in the world. It was also noted that Regulatory clearances/ Environment clearance caused significant project delays since questions get asked in packets and the case repeatedly moves back and forth.
Other issues that were highlighted included increasing the limit of delegation to port trust, resolving the issues of industrial dispute because of labour which hamper corporatization of major ports, lack of long term finance for projects and unavailability of non-recourse financing, operational challenges as well as low depth of channels at the ports.
The next issue on the platter was related to Port Financing which was handled by Mr. Asit Sikdar, VP, SBI Capital Market Limited who noted that the key factors for port viability are the provisions of the concession agreement (including revenue share); clearances and approvals; underlying demand; traffic composition; supply factors (new capacity or upgradation of competing facilities); Tariff; infrastructure at ports and various applicable policies/ regulations.
One of the prestigious projects from the bouquet of opportunities available with Gujarat Maritime Board is development of Port Cities along the coastline of Gujarat. GMB is very optimistic about the development of port city at Mundra. However, the project being in a very nascent stage, it was pertinent for us to seek if there would be any challenges that could arise when we move ahead for the implementation of this project. Keeping this theme in mind, Mr. Mukesh Oza, Group President & CEO Samsara Group presented his views on the Challenges in developing port cities in Gujarat.
An ideal port city should have the components such as Townships; Power/water sources; Commercial centers; Port infrastructure; capability to handle big ships; Road/Rail/Air infrastructure; various industries; Processing/storage/ distribution zones; Logistics warehouses. Ideal Port cities need to provide an optimal mix of industrial, commercial, residential and leisure facilities with a greater thrust on development of sound transportation network; real estate and environmental sustainability. He warned about the unplanned expansion of ancillary industries that could lead to haphazard development. Mr. Oza also noted that Port cities that are owned by city authorities are generally less successful than those privately owned.
Another important aspect of today’s ports sector is its integration of information technology in port operations. This aspect and challenges faced in implementation
of information technology in port sector was presented by Mr. N V Ramaraju, CEO, Envision Enterprises Solutions Pvt. Ltd. An ideal IT system should be functional; deployable; adaptable; auditable; scalable; integratable; manageable and affordable. The challenges in port automation include lack of availability of very few industry solutions; lack of industry experts; multiple business models; high regulatory control; dependency on physical documentation and the presence of a large number of players with different backgrounds.
Legal hassles are something which is being faced by various stakeholders of port industry. This aspect was highlighted by Mr. A Balasubramanian, Senior Director, Project Finance, IDFC Ltd. It was noted by him that instead of economic regulation, one should look at technical regulation in terms of safety, conservancy, competition etc. and the emphasized on the importance of unleashing the competitive market forces, but with checks and balances.