1 crisil-ramnath iyer

Port: Sector Trends

January, 2008

Administrator

Typewritten Text

EXIT

2.

Contents

1. Overview of the Port Sector

a) Global trends in the sector

b) Expected Requirement of Funds

2. Traffic Forecasts

a) Current cargo distribution

b) Capacity forecast

c) Demand –Supply gap

3. Port Connectivity

a) Dedicated freight corridor

b) Project for improving rail connectivity of ports

c) Golden Quadrilateral

4. Residual issues

a) Model Concession agreement vis-à-vis project parameters

b) Implication on shareholding pattern

c) States own framework

d) Safeguarding PPP interests

Overview of the Port Sector

4.

India is following international trends in the Port Sector

Source: World Bank, UNCTAD, WTO, CRISIL Analysis

International Trends Situation in India

•High growth in world trade: Merchandise trade

grew by 8 % in 2006, 6% in 2005 and is expected

to grow by 6 % in 2007.

•Same: Traffic at Major port has grown by average 10% each year

this decade. Minor ports grew at more than 12%

•Ports are serving as intermodal links as critical

nodes in international supply chain networks.

•Getting there: More ICD/CFS being set up near ports with value

added services. Road and rail connectivity improvement projects

launched

•Increasing privatisation: Shift from service port

to landlord port model

•Same: Major Ports are gradually increasing participation from

private sector. 13 terminals with capacity of 38.8 mtpa operational

•Increasing containerisation: Top 20 container

ports witnessed double digit growth in the last

few years

•Same: Container traffic at Major Ports grew at CAGR of 15.9% from

1999-00 to 2006-07 and during last year the growth was

overwhelming 21.73%. Even during first half of FY08 container traffic

at JNP grew at 25%. Other cargo grew at less than 6%.

• For year 2006-07, Containerisation level in India is around 68%.

•Traffic concentration on large intermodal

platforms: first 10 containers ports handled 31%

of the world traffic in 1980, and more than 40%

today.

•Same: One port JNPT handles 60% of all container traffic among major ports.

•Dry Bulk traffic is concentrated on three ports in the east – Vizag, Paradip and Kolkata

•Emergence of few global players •No such trend is there in India, but global payers are bullish at

Indian ports and taking over operations where ever possible.

•Increasing speed and size of vessels •Indian ports do not have capacity to handle such vessels. However,

plans have been made to improve capacity and channel depth

GrowthGrowth

Intermodal Links Intermodal Links

PrivatisationPrivatisation

ContainerisationContainerisation

Traffic concentration Traffic concentration

Industry concentration Industry concentration

Vessel trends Vessel trends

5.

….Still a long way to go• Installed port capacity in India and China are ~0.75 btpa (0.504 + 0.25 ~ major and minor port

capacity) and 5.6 btpa respectively.

• Container terminal capacity in China is ~60 m teu vis-à-vis India’s capacity of 8.6 million teu in 2006-07.

• The largest container vessel making a call at JNP India’s premier container terminal is 6,000 teu, whereas Emma Maersk (more than 13,000 teu capacity) makes call at a number of Chinese ports namely Yantian, Hong Kong, Ningbo, Xiamen etc.

• Chinese ports the average turnaround time is 0.8-0.9 days whereas at JNP and Visakhapatnam (main ports for Container and Bulk) is 1.67 days and 3.65.

• As per Federation of Indian Mineral Industries (FIMI) rail freight in Australia, Brazil and other developing nations like China is around Rs. 0.43 per tonne per Kilometer whereas in India it is nearly four times higher at Rs. 1.81 per tonne per km (and is increasing).

* Consolidated charges are given at Salalah Web-sites. *Berth-hire and tug charges are for a shift of 8 hours.Source: Various Port-websites and TAMP.

Port Dues 14,300 2,785 2,808 6,656 1,275 1,170 910 858 1,566 1,389 1,911 6,526 5,980 Pilotage 4,961 9,828 14,466 347 780 468 272 691 2,031 1,911 8,845 9,282 Tug 409 3,575 750 2,504 1,154 1,447 764 Berthing 259 1,521 190 166 148 - Harbour Dues 304 - - - Berth Hire 1,300 770 1,092 2,059 1,535 967 109 447 601 Total Charges 15,600 8,515 13,728 23,182 2,290 5,525 3,953 3,824 5,112 5,982 4,696 15,818 15,863

Vessel related charges at various ports in India, Asia and Far-East Asia region (USD)

Mundra JNP Cochin Dubai Mauritius Aden Salalah SingaporeHong Kong

Marine Charge US $

Visakhapatnam ChennaiPipavav Colombo

For a Vessel of 2500 teu and 26,000 GRT the vessels charges at Indian and other regional ports

6.

….Still a long way to go

• The draft at Singapore is 19+ m where as at JNP its 13.5m only.

• The berth length at Singapore and Dubai are 13,800 and 4,426 m whereas total berth length at JNP is 3200 m (including 2 shallow berths of 600 m each) only.

• Bulk cargo handling cost at most of the Indian ports are in range of Rs. 35 per ton to Rs. 200 per tonne depending upon the type of commodity, which is slightly on higher side when compared to other international ports in dollar terms however, time spend in handling is much more.

Container handling charges at Indian port in Rs/teu

Gateway boxes (INR)Ship-yard – loaded 3,000 2,210 2,210 2,720Ship-yard – empty 1,785 1,785 2,560Yard to rail (ICD) – loaded 3640 1,105 1,105 1,080 3,770Yard to rail (ICD) – empty 1,105 1,105 1,040 3,270Yard to truck – loaded 340 340 680 2,470Yard to truck – empty 340 340 640 1,970Total box costShip-road – loaded 3,000 2,550 2,550 3,400 2,470

Ship-rail – loaded (INR) 3640 3,315 3,315 4,375 3,770Ship-rail – loaded (US$) 91 83 83 109 94

MICT MumbaiService Pipavav JNPCT NSICT

Upto 20'Full 129 75Full T'ship 143 140Empty 66 30Empty T'ship 96 100

Over 20'Full 191 115Full T'ship 199 200Empty 90 40Empty T'ship 136 140

Container type Dubai (USD) Salalah (USD)

Container handling charges at Dubai and Salalah

7.

Expected Requirement of Funds

8.

Going forward the XIth Plan, will see a doubling of port capacity

272 281 288314

345384

424

258291

344 363390 398

456

0%

20%

40%

60%

80%

100%

120%

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

Cap

acity

Utli

satio

n (%

)

050100150200250300350400450500

Traf

fic/C

apac

ity (M

T)

Capacity Utilisation Traffic Capacity

• Investment of Rs.55,804 crores in the major ports to boost the existing infrastructure at these ports. 276 projects identified.

• Will be implemented in two phases. •Phase-I covers all investment till 2009 (from 2005- 06)•Phase-II covers all the projects upto 2012.

• Around 64% of the proposed investment in major ports are envisaged from private players.

95% of total volume of international trade is handled by Ports yet they face capacity bottlenecks

The government is planning to more than double the capacity at Major and Minor Ports in the XI Plan

Source: Indian Ports Association, CRISIL Analysis

Traffic & Capacity at Major Ports in the past Capacity addition envisaged in XI Plan (MT)

228

574

509

1002

Present Capacity (Mar 07) Capacity by Mar 2012

Major PortsMinor Ports

151%

97%

114%

Total =737

Total =1,575

Source: Working Committee report on 11th FYP, CRISIL Analysis

The National Maritime Development Programme will be major driver for investments in the Major Ports

For Minor Ports states like Maharashtra, Andhra Pradesh and Gujarat are taking the lead

State Present Capacity

(Mar 2007)

Expected Additional Capacity

during 11th FYP

Capacity by March

2012Andhra Pradesh 18.5 84.3 102.8Gujarat 182.0 56.0 238.0Karnataka Ports 4.0 26.0 30.0Kerala 0.1 27.7 27.9Maharashtra 11.1 85.2 96.3Tamil Nadu 0.9 28.8 29.7Others 11.8 37.1 48.9Total 228.3 345.2 573.5

9.

And most of this will be driven by the NMDP

Project Head No. ofProjects

Budgetary Support

Internal Private Others** Total Total (USD Billion)Resources Investment

Deepening of channels/ berths 25 2,731 3,340 185 48 6,304 1.54Construction/reconstruction of berths 76 563 3,867 28,083 50 32,564 7.94Procurement of Equipments 52 0 1,428 1,075 130 2,633 0.64Rail and Road connectivity works 45 90 2,232 0 3,634 5,956 1.45Others*** 78 225 2,904 5,162 56 8,347 2.04Total 276 3,609 13,772 34,505 3,918 55,804* 13.61

The NMDP will add 402 MT of capacity by 2011-12 in Major Ports by investments of over Rs. 55,000 Cr.

58% of total investment will be for construction of berths and most of it is envisaged to come from Private players

Source: NMDP, March 2006. *For the period F.Y. 2006-07 to F.Y. 2011-12. After deducting Rs. 6,038 crores that was expected to be spent by 2006-07, the remaining investments of

Rs. 49,765 crores are expected to take place by 2011-12. ** Includes projects executed by other agencies. Eg, NHAI*** Technology upgradation, illumination, storage area development etc.

SI. NO. Port Name Project Cost (Rs. Cr.)1 J.N.P.T. 4th Container Terminal 3000.002 New Mangalore LNG terminal 2600.003 Cochin International Container Transshipment Terminal 2118.004 Cochin LNG Re-gassification Terminal 2050.005 Tuticorn Outer Harbour Facilities 1865.706 Ennore Port Ltd. LNG Terminal 1700.007 Tuticorn Ship building yard 1350.008 Ennore Port Ltd. Container Terminal 1300.009 Kandla Berthing and allied facilities 1200.0010 Tuticorn Development of Outer Harbour - construction of break water 1171.2011 New Mangalore Outer Harbour for development of of Addl. Port Facilities 1325.0012 Mumbai Two off shore container terminals 1228.0013 Ennore Port Ltd. Mega Power plant coal terminal 760.0014 Cochin Special Economic Zone 850.0015 Cochin Crude Oil Terminal for Kochi Refinery 720.0016 New Mangalore Container Terminal for transshipment 700.0017 Kandla Offshore Liquid Terminal 698.3818 Kolkata Port Trust Three riverine jetties at saugor 700.0019 Viskhapatnam SBM facility for crude oil (HPCL) 540.0020 Paradip Deep Draught Iron Ore Berth 504.77

Top 20 projects in NMDP•Focus of projects is for containers, LNG/POL and Coal

10.

Government estimates indicate USD 22 Billion dollars of investment

1,098

1,249

1,396

1,330

1,255

1,819

1,554

1,009

443

1,724

4,465

1,176

3,138

1,363

1,625

5,300

834

5,115

6,282

4,952

731

1,084

3,453

2,992

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

Kolkata

Paradip

Vishakapatnam

Ennore

Chennai

Tuticorin

Cochin

New Mangalore

Mormugao

Mumbai

JNPT

Kandla

Plan Outlay Private Sector

Total Investments in 11th FYP Rs. Cr. (USD Billion)

4,236 (1.03)

2,611 (0.64)

3,021 (0.74)

6,630 (1.62)

2,088 (0.51)

6,934 (1.69)

7,836 (1.91)

5,961 (1.45)

1,174 (0.29)

2,808 (0.68)

7,918 (1.93)

4,168 (1.02)

11th FYP estimates that of the total Requirement, 67% will come from the private sector

Investment plans of Major Ports (Rs. Cr.)

Ports 11th Plan Outlay Private Sector Total Investments in 11th FYP Rs. Cr. (USD Billion)Total for Major Ports 18,533 36,868 55,401 (13.51)Non-Major Ports 12,020 23,912 35,932 (8.76)Total for All Ports 30,554 60,780 91,334 (22.27)

Traffic and Capacity Forecasts

12.

Traffic

13.

31 31 36 42 47 5420 21 24 25 30 3350 48 51 58 65 7454 53 5660

7074

13 12 1314

1414

19 1822

2837

38

22 2629

3639

43

52 5462

72

8093

108 120125

131

139

150

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Gujarat has had the maximum traffic but Karnataka and Goa have shown the highest growth

Source: NMDP report – March 2006, IPA, website-IPA*Includes data for Major and non-major ports

Evolution of India Ports Traffic *(In MT)

Gujarat 6.83

Maharashtra

Goa

Orissa

418

Total =368

465

521

574

KarnatakaKerala

Tamil Nadu

Andhra Pradesh

West Bengal

CAGR %

12.51

14.16

15.63

6.65

8.40

10.56

11.92

1.1

384

9.32

14.

Gujarat will retain the top position but Karnataka and Goa will have the highest growth

11 11 12 13 139 11 13 15 1629 31 34 38 4514 16 17 20 2410 13 15 15 1825 27 29 29

301 1 1 1

135

38 40 4347

114128

144159

184

2007-08 2008-09 2009-10 2010-11 2011-12

Source: CRISIL Analysis*Includes data for Major and non-major ports

Traffic Forecasts - Liquid(In MT)

275Total =248

303332

378

CAGR %

Gujarat 13%

Maharashtra 7%

Goa 2%

Karnataka 5%

Kerala 17%

Tamil Nadu 15%

Andhra Pradesh 12%

Orissa 15%

West Bengal 4%

15.

Bulk traffic is dominated by the East Coast ports and they will grow faster than western coast ports

26 27 29 31 3439 42 52 65 7758 61

7074

7651 5460

7285

2 22

47

18 1817

1822

45 4646

48

50

3134

33

36

37

6267

66

68

72

2007-08 2008-09 2009-10 2010-11 2011-12


Traffic Forecasts – Dry Bulk/Break Bulk(In MT)

352Total =331

376414

460

CAGR %

Gujarat 4%

Maharashtra 4%

Goa 3%

Karnataka 6%

Kerala 45%

Tamil Nadu 14%

Andhra Pradesh 7%

Orissa 19%

West Bengal 8%

16.

Maharashtra and Gujarat dominate the container traffic but Tamil Nadu and Kerala will grow much faster

6 7 8 11 130 0 0 0 01 2 4 6 720 22 24 32 364 4 915 18

0 0 00 0

0 0 00 0

44 5158

6779

11 1215

1416

2007-08 2008-09 2009-10 2010-11 2011-12


Traffic Forecasts – Container(In MT)

98Total =86

119146

170

CAGR %

Gujarat 10%

Maharashtra 16%

Goa 4%

Karnataka 3%

Kerala 49%

Tamil Nadu 16%

Andhra Pradesh 53%

Orissa 41%

West Bengal 19%

17.

Overall the east coast ports are expected to grow faster than the west coast ports

43 46 49 54 6048 53 64 81 9388 95 107 117 12885 93

101124

146

15 1826

3442

43 4546

4753

4647

4749

51

111123

132

146

163

187206

225

241

272

2007-08 2008-09 2009-10 2010-11 2011-12


Traffic Forecasts – Total(In MT)

726Total =665

798893

1009

CAGR %

Gujarat 10%

Maharashtra 10%

Goa 3%

Karnataka 5%

Kerala 30%

Tamil Nadu 15%

Andhra Pradesh 10%

Orissa 18%

West Bengal 9%

18.

Capacity Forecasts

19.

•IOC is setting up SBM at Paradip

Bulk of the liquid capacity will be added by Orissa and Maharashtra

0 0 0 0 0

27

0 0 0 0

0

0 0 1

14

0

3 3 1

0

6

0 0 5

0

0

0 0

60

0

0 0

0 0

0

15

2

1 0

0

0

0

0 0

2007-08 2008-09 2009-10 2010-11 2011-12

West Bengal Orissal Andhra Pradesh Tamil Nadu KeralaKarnataka Goa Maharashtra Gujarat

Source: CRISIL Analysis

Major Ports Capacity Addition Forecasts - Liquid(In MT)

18

Total =33

5

14.3 14.1

•Construction of two berths at Mumbai •HPCL is planning to set up an SBM at Vishakhapatnam

SBM at CochinBerth for chemical and POL product at Ennore

20.

07

0 06

0

0

0

200

2

15

2

030

20

3

07 0

0 1

00 3

4 2

00 0

0 1

0

07

04

0

0

8

0

5

4

2007-08 2008-09 2009-10 2010-11 2011-12


East coast is expanding capacity for bulk cargo


Major Ports Capacity Addition Forecasts – Dry Bulk/Break Bulk(In MT)

26

Total =12

29

38

10

•Coal and Iron Ore berth at Ennore

•Coal and Iron Ore berth at Paradip

• Two dry bulk berths at Haldia

21.

0 0 06

00 0 00

00 0 0

3

00 010

0 18

0 0

13

0

0

0 0

0

0

0

0 0

1

0

0

70

10

260

07

0 0

0

2007-08 2008-09 2009-10 2010-11 2011-12


Majority of additional container traffic is coming up on the west coast


Major Ports Capacity Addition Forecasts – Container(In MT)

7

Total =7

33.535.8

18

•Offshore container terminal at Mumbai

•Fourth container terminal at JNPT

•Private container

berth at Kandla

•Transhipment terminal at Vallarpadam (Cochin)

•Second container terminal at Chennai

•Ennore container terminal

22.

0 0 0 0 00 0 0 0 00 0 0 0 00 0 07

00 0 0

0

00 0 0

0

00 0 0

0

00 2 0

2

00 0

17 0

02007-08 2008-09 2009-10 2010-11 2011-12


Capacity addition is much less than expected for liquid bulk


Minor Ports Capacity Addition Forecasts - Liquid(In MT)

2

Total =017

9.2

0

•Gujarat has recently invited EoI for nine ports

•Tamil Nadu has awarded captive jetties to private players for their POL/Chemical traffic

23.

0 0 0 0 00 0

2514

2018

0

34

0

00

0

0

10 00

0

0

300

0

0

07

0

0

0

0 0

0

6

0

30

0

4

17

00

2007-08 2008-09 2009-10 2010-11 2011-12


East coast is expanding capacity for bulk cargo led by Orissa and Andhra Pradesh


Minor Ports Capacity Addition Forecasts – Dry Bulk/Break Bulk(In MT)

10

Total =18

76.35

30

26.5

•Dhamra (Orissa)

•Kirtania (Orissa)

•Krishnapatnam (AP)

•Machilipatnam & Gangavaram in AP (Nizampatnam concession recently cancelled due to land allotment issues)

•Gujarat Ports

•Karaikall (Pondicherry)

•Gopalpur (Orissa)

24.

0 0 09

00 0 0

0

00 0 0

0

00 0 0

0

00 0 0

15

00 0 0

0

00 0 0

0

007

0

17

30

0

0

0

0

0

2007-08 2008-09 2009-10 2010-11 2011-12


Majority of additional container traffic is coming up in Maharashtra


Minor Ports Capacity Addition Forecasts – Container(In MT)

7Total =0

0

40.7

30

•Jaigad & Rewas ( Maharashtra)

•Dighi (Maharashtra)

•Vizhinjham (Cochin)

•Kulpi (West Bengal)

•Rewas (Maharashtra)

25.

22

0

4

45

30

0

1

147

20

21

48

48

29

22

27

2

60

160

Gujarat, Maharashtra, Orissa, AP and TN are the main drivers of additional capacity in ports

Source: CRISIL AnalysisIncludes Major and Minor Ports

CRISIL Forecast of Capacity in all ports at end of 11th Plan(In MT)

Gujarat

Maharashtra

Goa

Karnataka

Kerala

Tamil Nadu

Andhra Pradesh

Orissa

West Bengal

Liquid Dry Bulk / Break Bulk

Container Total

286.94

252.86

48.97

65.33

68.73

163.16

163.39

172.40

82.5340

124

111

89

16

38

46

46

107

Demand Supply Gap

27.Source: Report of Working Group for Port Sector for XI Five Year Plan, CRISIL’s Analysis

Forecasted Capacity (MT)

Forecasted Traffic and Capacity – XI Plan and CRISIL’s View

-30 20 70 120 170 220 270 320 370

West Bengal

Orissa

Andhra Pradesh

Tamil Nadu

Kerala

Karnataka

Goa

Maharashtra

Gujarat

Capacity (MT)

CRISIL Capacity XI Plan Capacity XI Plan Traffic

25

-53

20

48

14

34

73

79

31

Ennore projects of LNG and UMPP Coal berth estimated to come up after 2012

Offshore liquid terminal and greenfield berths at Tekra (Kandla) estimated to come up after 2012

Planning Commission has not considered Kirtania

Nizampatnam concession cancelled. Kakinada anchorage estimated to come up after 2012

Port Connectivity

29.

Dedicated Freight CorridorWestern corridor

• Comprises of 1483 km of double line diesel track from JNPT to Dadri via Vadodara-Ahmedabad- Palanpur-Phulera-Rewari.

• Alignment has been generally kept parallel to existing lines except provision of detour at Diva, Surat, Ankleshwar &, Bharuch, Vadodara, Anand & Ahmedabad, Palanpur, Ajmer, Ladpura, K.garh, Phulera, Ringus and Rewari.

Eastern Corridor

• The Eastern Corridor encompasses a double line

electrified traction corridor from Sonnagar on the

East Central Railway to Khurja on the North Central

Railway (820 Km), Khurja to Dadri on NCR Double

Line electrified corridor (46 Km) and Single

electrified line from Khurja to Ludhiana (412 Km) on

Northern Railway. The total length works out to

1279 Km.

30.

Rail connectivity to West coast portsBHATINDA

DELHI

MATHURA

KOTA

NAGDA

RATLAM

Towards MUMBAI

GANDDHID HAMGODHARA

VADODARA

ANAND

AHMEDABAD

MEHSANAVIRAMGAM

BHILDI

SAMKHIALI

KANDLA PORT

BHUJ

ADIPUR

MUNDRA PORTJAMNAGAR POR T

JAMNAGAR RAJKOT

SURENDRA NAGAR

PALANPUR

LUNIMARWAR

MERTA

AJMER

PHULERA

BIKANER

SURATGARHREWARI

ALWAR

BANDIKUI

JAIPUR

(298)

(141)

(324)

(235)

Towards BHOPAL(41)

(185)

(75)

(36)(79)

(62)(54)

(66)

(116)(85)(5)

(57)

(58)

(235)

(255) (65)

(46)

(275)(218)

(104)

JODHPUR

(32)

(104)

(140)

(80)

(154)(55)

(91)

(173)

(182)

(142)

(60)

(123)

(74)

(78)

(300)

Broad GaugeMetre Gauge (under conversion)BG (Elect.)

Future connectivity for ports in Gujarat apart from linkages to DFC

• Luni – Bhildi – Samkhaili to provide

additional link for Kandla and Mundra apart

from future ports like Jamnagar and

Positra.

• Bhildi-Palanpur-Mehsana link will give

alternate route to cargo from Punjab to

Mumbai region ports.

• Broad gauge conversion between Rewari

and Ajmer ease traffic on the main track

between TKD and Mumbai and will also

provide additional loop for Kandla and

Mundra.

• The recently submitted report by RVNL to

railway board states that it may take more

then 12 years to complete all the bridge

works coming in the route of DFC. Thereby

putting question on early arrival of DFC.

31.

Rail project to increase connectivity of west coast portsPanvel - Jasai – JNPT doubling of 28 km of track

(Railway + BOT)Diva-Kalyan doubling of 5&6 line. Length is 11 KM

Gandhidham-Palanpur railway line for port connectivity. Length is 313 km and project require lenders.

Arsikeri-Hasan-Mangalore. To connect Mangalore port to the hinterland

32.

Rail project to increase connectivity of west coast ports62 km of new railway track for connecting Dahej

Rewari-Ajmer-Phulera_ringus Gauge change to increase port connectivity

Delhi-Rewari gauge conversion of 572 kmBhildi- Samdhari gauge conversion of 1400 km

33.

Rail project to increase connectivity of east coast ports

Salem-Cuddalore via Vriddhachalam 191 km for port connectivityThanjavur –Villupuram via cuddalore

Banspani-Daitari, new line and electrification for Paradip port connectivity

Talcher-Cuttack-Paradeep (2nd Bridges on Mahandi & Birupa)_Doubling

34.

Rail project to increase connectivity of east coast portsObulavaripalli - Krishnapatnam 129 km New Line

Attipattu-Korukkupettai 3rd Line of 18 km

Panskura - Haldia Phase II, doubling 53 km Haridaspur – Paradeep, new line of 78 km

35.

Golden Quadrilateral

BAF AAF Diff.

Delhi - Kolkata (2) 1469 1453 -14 1001 452 140Kolkata - Chennai ( 5, 6 & 60) 1751 1684 -90 1436 248 285Chennai - Mumbai ( 4, 7 & 46) 1278 1290 12 1099 191 304Mumbai - Delhi (8,79,76) 1454 1419 34 1408 11 128

Total 5,952 5,846 -106 4944 902 857

All lengths in Kms.

Corridor (NH)Length

4-Laned U-I BOT

BAF: Before Alignment fixing, AAF: After Alignment fixing,U-I : Under Implementation

Port Stretch NH Length (KM)Original/Estimated

completionHaldia Port NH-41 (from Kolaghat on NH-

6 to Haldia) 41 53 Dec-09New Mangalore Port NH-17 (Suratkal-Nantur

Section), NH-48 (Padil 13,17,48 37 Jun-08Tuticorin Port NH-7A (Tuticorin - Tirunelveli

section) 7A 47.2 Dec-07Paradip Port NH-5A (from km 0 to km 77)

5A 77 Jan-08Chennai - Ennore Express Way

TPP Road,SR 9 Jul-08

Chennai - Ennore Express Way

Inner Ring Road & Manali Oil Refinery Rd. SR 15 Aug-08

Cochin Port km 348/382 - km 358 750 Including 5 Major Bridges 47 10 Jun-09

Jawaharlal Nehru Port Phase-II

SH-54 + Amramarg + Panvel Creek Bridge SH 54 14.5 Jan-08

NH Connectivity to ICTT Vallarpadam SH 17.2 Feb-10

Port connectivity projects under implementation

http://www.nhai.org/nhdpmain_english.htm

Residual Issues

37.

MCA now outlines the role of public and private players…

TrafficRisk

TrafficRisk

• Traffic risk is with the developer

• But concession period can be increased by seven years if traffic is lower than forecast. Eg.

– a shortfall of 10% in the target traffic after 20 years will lead to extension of the concession period by 5 years.

– an increase of 6% in the target traffic will reduce the concession period by 18 months

• Since tariff are set such that return of 16% is guaranteed and minor ports have no restriction on tariffs so revenue risk is minimal

• Change in concession period gives greater comfort that investments will get recovered but imparts greater uncertainty in business planning

• Technical parameters will focus on the level of service for the users

• Concession period fixed at 30 years

• Technical parameters will leave room for innovation

• Construction period is part of concession period incentivising concessionaire to reduce construction period

MCA Impact

Project Scope & CP

Project Scope & CP

38.

… and the MCA now outlines the role of public and private players

• Due to capacity constraints there is lack of competition.

• Hence, TAMP will continue to set tariffs but it will capped at levels of competing ports in the region.

• Tariff increase will be indexed @ 40% to WPI

• TAMP sets tariff at base year and it increases indexed to inflation

• This impart greater certainty to the tariff setting method thus giving greater comfort to the investor

• Concession fee is Rs 1 per annum for the concession period

• If no subsidy grant is sought then bidding based on revenue share, else bidding based on amount of subsidy sought

• Revenue share will increase by additional 1% every year

• 20% of TPC during construction as Equity Support

• 20% of TPC during O&M as equity support

• Revenue share system reduces benefits from upside

• Revenue share is less during initial period and increases progressively. This will make it easier to meet debt service obligations

MCA Impact

Tariff settingTariff setting

Concession Fee &Grant

Concession Fee &Grant

39.

… while States, are putting in place the appropriate framework….

AndhraPradeshAndhraPradesh

• Tariff Fixation: Free

• Labour employment: No restriction

• Land acquisition: Government will assist using the Land Acquisition Act.

• Water and Power connection: Government will help

• Concession fee: 2.5 % of gross income per annum for Greenfield Ports

• Wherever feasible Captive Jetties/Captive Ports will be permitted

• Suo-moto proposals: Swiss challenge.

• Tax Incentives: Exemptions on Sales tax, seigniorage charges, Stamp duty etc if project is unviable

MaharashtraMaharashtra

For Greenfield, All-Weather Ports


• Land acquisition: Government-owned land to be transferred at market value

• Concession period: 50 years

• Equity participation by the state government upto 11 %

• Tax Incentives: Exemption from payment of registration fee and stamp duty, MMB to charge concessional wharfage

• Road connectivity upto the nearest national highway to be part funded by MMB/ state government

policy

GujaratGujarat

For Greenfield, All-Weather Ports


• Land acquisition: Government responsibility

• Concession period: 30 years + 20

• Project feasibility study: Ready

• Lenders protection: Yes

• Compensation on project transfer: Yes

State

40.

• While currently tariffs at major ports are set on cost plus basis guaranteeing ROCE of 15%, a debate is raging on what should be the appropriate method.

• Two schools of thought•Present system is fine since capacity does not allow free competition•Present system does not incentivise efficiency. Tariffs should be benchmarked to nearby international ports and subsequent increase should be predetermined

… but, to ensure PPP interest following interventions are required

IssuesIssues InterventionsInterventions

Policy differences

between Minor ports and Major

ports

Policy differences

between Minor ports and Major

ports

• Minor ports enjoy much less regulatory oversight giving more freedom to private operators

• Private operators at Major ports feel that TAMP guidelines on tariffs are restrictive

• But majority of PPP opportunities are available at Major Ports

• Greater freedom should be granted to Major Ports. The government should restrict itself to just a coordinating role to ensure that expensive infrastructure is not duplicated

Uncertainty over tariff setting philosophy

Uncertainty over tariff setting philosophy

Slow bidding process

Slow bidding process

Process Time Taken (months)Detailed Project Report 6Approvals 6RFQ 3RFP 3Financial Closure 6Total 24

• Time taken to procure a typical port project is very long

• Government needs to establish a tariff setting philosophy and outline a clear roadmap for its implementation

• Time taken for different approvals should be reduced

• Procedure should be streamlined. Eg. Environmental clearance before bidding

41.

• Case of Vallarpadam/ Vizinjham• Both ports are getting developed simultaneously near

to each other• Both are aspiring to become Hub Ports for

transshipment• It is unlikely that both can emerge as Hub Ports,

hence investments may get impacted

… but, to ensure PPP interest following interventions are required

IssuesIssues InterventionsInterventions

Hinterland connectivity is

poor

Hinterland connectivity is

poor

• Evacuation infrastructure needs to be properly defined for hinterland movement

• While railways have granted licenses to private container train operators issue of track capacity remains

• For track capacity Dedicated Freight Corridor is being built but do we have sufficient capacity in Southern India where the transshipment terminals are coming up?

• NHAI has to speed up road connectivity projects

• Railways should encourage the SPV model as it has been successful – Pipavav Railway, Hassan Mangalore and Kutch Railway

Coordination between Major

and Minor Ports

Coordination between Major

and Minor Ports• Maritime States Development

Council needs to coordinate developments better

42.

www.crisil.comwww.standardandpoors.com

Administrator

Typewritten Text

EXIT

1 crisil-ramnath iyer

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