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Port Sector -
Privatization Initiatives and implementation
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Introduction
Gujarat is the most important state amongst 9 coastal states of
India. The State of Gujarat has got a naturally gifted very long
coastline in comparison with the other coastal states. Gujarat
has 1600 Kms long coastline, which is about 1/3rd of the total
Indian coastline, and have a 43 ports. Amongst these, Kandla is
a Major port and is administrated by Kandla Port Trust (an
autonomous body) on behalf of central government and Diu and
Daman are two minor ports under central government. Remaining 40
ports located on the state coastline are under State Government.
The Government of India has adopted a liberalization policy
since last decade. The main aim of the liberalization is to
develop major sectors of India with the help of private
investment. The port sector is one of the sectors amongst
others, which is selected to develop in private sectors. The
state government has also adopted the policy of liberalization.
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Importance of Good Governance
With liberal policy frameworks becoming commonplace and losing
some of their traditional power to attract private investment,
governments are paying more attention to broader measures and
policy tools including investment promotion and facilitation. As
investors have a variety of sectors and investment opportunities
to choose from, making investors aware of the opportunities,
improving the sectoral image and more importantly providing an
enabling environment, can often determine the attractiveness of
a sector. The main determinants of private investment is general
include size of markets, infrastructure, macroeconomic
stability, inputs, labour and product markets, incentives,
integration schemes, methods of private participation, attitudes
and overall business environment.
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Gujarat's Minor
Ports
Considering current globalization as well as liberalization and
looking to the importance of increasing Indian business and
Gujarat
industrial development, it is expected that the import and
export business will increase in big way, in the future. In view
of rapid industrialization, rising international trade of north
Indian states, requirements of roads and rail infrastructure and
other such aspects, the state government declared an integrated
Port Policy in December 1995.
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Users
Friendly Policies
4.1
Port
Policy - 1995
The state has
already framed one of the earliest port policy in the country,
which put more focus on development of new port facilities
through private investment participation with synchronization of
small and large investor in port sector.
4.2
Objectives of
the Port Policy
To maximize the
envisaged benefits of the potential increase in maritime traffic
through Gujarat, the Ports & Fisheries Department of the State
Government has identified the following objectives for the New
Port Policy.
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To increase
Gujarat’s share in the export and import sectors in national and
international trade and commerce in pursuance of the policy of
liberalization and globalization.
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To reduce the
burden on existing major ports on the western coast of India,
and to meet the requirements of the increased traffic from
western and northern states by providing efficient facilities
and services to support the country’s domestic and international
trade.
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To provide port
facilities to promote export-oriented and port-based industries
that is estimated to contribute 50 percent of the total
industrial investment in Gujarat.
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To take full
advantage of the strategic location of Gujarat coast by:
(a) Encouraging
shipbuilding, ship repairing and establishing manufacturing
facilities for cranes, dredgers and other floating crafts.
(b) Providing
facilities for coastal shipping of passengers between Saurashtra and
South Gujarat and other extending these services to important
destinations such as Mumbai and Goa.
- To meet Gujarat’s potential
power requirements by:
- Establishing barge-mounted
power plants.
- Providing exclusive port
facilities for importing different kinds of power fuel.
- To attract investment from
private sector for the development of the existing minor and
intermediate ports and new ports.
As per the port policy announced by the Government of
Gujarat, Gujarat Maritime Board has selected 10 Green Field
Sites for development of new ports as "All Weather Deep
Water Direct Berthing Ports". These ports are identified
looking to the marine conditions and hinterland. Amongst 10
ports, 6 ports are to be developed by entire private
investment and remaining 4 ports are to be developed in
joint sector.
4.3
To make available Study reports for the projects
To get the positive response from the private investors, the
Gujarat Maritime Board had conducted Pre-Feasibility
study/Detailed Project Reports for the new
Greenfield
sites so that the investors could finalize and implement the
projects.
4.4 BOOT POLICY
[BUILD, OWN, OPERATE & TRANSFER]
The Government of Gujarat announced a package of BOOT
Principles as next action to port policy aiming to serve as a
framework for involvement of private sector in the construction,
operation and maintenance of the new ports.
The salient features of BOOT policy are:
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Timeliness of
infrastructure creation.
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Efficiency of
operation and operational autonomy to the Private sector.
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Synchronization
with hinterland development
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Government’s
role to be maintained only in appropriate areas.
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Government
financial liabilities to be kept to a minimum.
4.5 BOT LAW:
Government of
Gujarat is the first state in
India, providing
legislative protection to private entrepreneurs for infrastructure
project participation. In April 1999,
Gujarat
State
came with an ordinance viz. The Gujarat Infrastructure Development
Ordinance. The ordinance provides a framework for participation by
persons other than the State Government and Government agencies in
financing, Construction, maintenance and operation of infrastructure
projects.
4.6 Competitive
and Transparent policy framework for selection:
- Single Window framework for
infrastructure project - GID Act
- Global competitive bidding
- Transparent selection procedure
of developer
- Scope of State participation for
initial stage development or strategic partner
- Bankable project document -
Model Concession Agreement
- Scope for sub concession for
development of specialized port facilities
- Scope for development of add on
projects
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Success
story of port development
Private-public
partnership in development of ports
5.1 PIPAVAV PORT
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Initially, development of port has been taken up in joint sector by
the joint sector company M/s. Gujarat Pipavav Port Ltd. in which, 26
% of shares were with Gujarat Maritime Board. Later in 1998, GMB
disinvested from the project and it has been decided to develop in
private sector on BOOT basis.
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Concession Agreement was executed on 30/09/98 with the company, to
develop Pipavav port with 30 years BOOT period.
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The
port is operational since 1996.
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A
jetty of 725 mt. long for handling solid bulk and a jetty of 305 mt.
long for handling liquid POL cargo was developed.
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MAERSK - a
Denmark
based company are strategic partner in GPPL Company.
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Broad-gauge rail connectivity provided by forming Separate Special
Purpose Vehicle company (SPV) with Railway Ministry (GoI)
partnership.
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Broad-gauge rail conversion of 270 km. from Surendranagar to Pipavav
has been commissioned in May 2003.
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Traffic handled at the port (in mln tonnes)
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Year |
Traffic |
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2001-02 |
1.54 |
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2002-03 |
1.79 |
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2003-04 |
1.90 |
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2004-05
Dec.04 |
1.63 |
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Total
Private Investment of Rs. 697 crores is realized.
(for more information see website of GPPL –
www.pipavav.com )
5.2 MUNDRA PORT
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As
per the port policy, the port is developed in joint sector.
Initially, GMB had equity of 26 % in the joint sector company.
Later, GMB disinvested and reduced its share and now holding 11 %
shares.
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A
joint sector company M/s. Gujarat Adani Port Ltd. has been formed in
the year 1998 for the development of the port.
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A
Concession Agreement for development of the port on BOOT basis was
signed between Government of Gujarat/ Gujarat Maritime Board and GAPL in February 2001.
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Company has constructed 4 multipurpose berths and commenced cargo
operation from September 1998. Ships up to 80000 DWT can berth at
the jetty.
For
handling of cargo, conveyor system having 18000 M. Tones Per day
capacity have been installed at the jetty.
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The
port has been operational since, 1998.
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Concession Agreement has been signed on February 2001 with the
company.
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The
company has established broad gauge rail link of 57 km. at an
investment of Rs.136 crores, with the port and commissioned in 2002.
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In
Phase-I development container berth of 632 mt. long berth is
completed and put into operation since July, 2003.
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For
operation and development of container terminal the company has
associated in May 2003 with P & O - an international container
terminal operator, which would bring foreign investment of Rs.1400
crores in terminal development.
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The
company have assigned an agreement with HPCL & IOCL for providing
port facility i.e. setting up SPM's for import of crude oil for
their refineries.
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The
total port project would be developed at an investment of @ Rs.2151
crores.
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Traffic handled at the port (in mln tonnes)
| Year |
Traffic |
| 1998-99 |
0.24 |
| 1999-00 |
1.17 |
| 2000-01 |
2.26 |
| 2001-02 |
3.48 |
| 2002-03 |
4.14 |
| 2003-04 |
4.53 |
| 2004-05 (Dec.
-04) |
4.47 |
5. 3 DAHEJ PORT
(a) PETRONET LNG LTD.
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A
joint sector company M/s. Petronet LNG Ltd., have been formed by
PSU's of Government of India for development of the port. All PSUs
holding 12.50 % equity in the company.
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The
project have been envisaged an investment of Rs.3130 crores.
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LNG
terminal with storage facilities have been developed and commenced
cargo operation from February 2004. The terminal have a capacity of
5 MMTPA LNG handling.
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For
LNG terminal 59 hectors land have been allotted, whereas, for solid
cargo 170 hectors land have been allotted by GIDC and possession of
the land is being taken up.
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The
company has made an investment of Rs. 2800 crores.
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LNG
handled at terminal:
| Year |
Traffic (in Million tonnes) |
| 2003-04 |
0.18 |
2004-05
(Dec. -04) |
1.79 |
(for more information see website –
http://www.petronetlng.com )
(b) CHEMICAL TERMINAL (GCPTCL)
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A
joint sector company M/s. Gujarat Chemical Port Terminal Co. Ltd.,
have been formed by PSU's of Govt. of Gujarat and Government of
India for the terminal development.
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GMB
has put up 17.50 % equity in the company.
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The
Chemical Port Terminal has been commissioned since January 2001.
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Annual Capacity to handle chemicals of the terminal is about 1.80
million metric tones.
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Besides liquid chemical storage facilities, the port facility
developed can accommodate of ships having size 6000 to 60000 DWT at
the berth.
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For
development of the terminal an investment of Rs.906 crores has been
made.
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Traffic handled - (in mln tonnes)
| Year |
Traffic |
| 2000-01 |
0.08 |
| 2001-02 |
0.75 |
| 2002-03 |
0.90 |
| 2003-04 |
1.08 |
2004-05
(Dec. -04) |
0.73 |
(for more information see website –http://www.gcptcl.com)
5.4
HAZIRA
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As
per the Port policy, Hazira port is being developed fully in private
sector.
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M/s.
Hazira Port Pvt. Ltd., a company promoted by an international
company M/s. Shell Gas B.V. for the development of Hazira Port.
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The
Port Project evolving development of LNG and other cargo facilities
at an investment of Rs. 3792 crores.
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The
company has signed concession agreement on April 2002 with GMB/GoG,
which is on BOOT basis.
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Construction of approach road, Southern and Northern Spur, LNG
jetty, Capital dredging of approach channel, turning basin and berth
pocket and reclamation have been completed.
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On
development of phase-1, the port would be able to handle about 16.50
MMTPA of various types cargoes viz. LNG, general dry bulk and
container.
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The
company has planned to commence cargo operation from March 2005.
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The
LNG terminal and Port Project was unveiled by Hon’ble Chief Minister
of Gujarat in the presence of Union Petroleum Minister and others on
19/9/2003.
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Total
investment of Rs. 2408 crores is made for the development of Hazira
port.
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Vibrant Gujarat 2005
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The state government organized the Global Investors' Summit Vibrant
Gujarat 2005 during 12-13 January 2005 wherein the port sector was
given the special focus to attract private investment in the
development of port facilities.
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The GMB took positive measures and identified 37 different project such
as development of new Greenfield ports, expansion of already
developed Greenfield ports, construction of new terminals in
existing minor ports, ship yard facilities, expansion of captive
jetty project, Hazardous waste disposal facilities, new port
facilities in existing ports, improvement of repairing facilities
and dry docks, enhancing cargo handling through mechanized handling
system, strengthening of existing jetty structures, Cruise training
ship, Oil reception facilities etc.
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The port sector has
succeed to attract a total investment of Rs. 15,585 crores and total
35 Memorandum of Understandings (MOU) have been
signed during the Global Investors’ Summit Vibrant Gujarat 2005.
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The last date for submission of Expression of Interest for the Greenfield
sites is kept on 31st March 2005.
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After, the event of Vibrant Gujarat summit, GMB has also received about
10 offers of Expression of Interest for the various projects.
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The
prominent National/International companies like Shell group,
Hutchison, Adani group, Essar group, Petronet LNG Ltd., Welspun
group, Sanghi Industries and others have shown interest for
investment in the above projects.
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Privatization
