A lobby group of India private terminal operators have sought the government’s policy intervention for permitting single cargo handling terminals to handle multi commodities at major ports.
Some of the public-private-partnership (PPP) concessions at major ports allow the operators to handle only one commodity such as coal, iron ore etc. The PPP projects are structured whereby the traffic risk is borne by the concessionaire, whereas the concessioning authority secures revenue through minimum guaranteed cargo mechanism.
There have been significant market disruptions hampering the functioning of these terminals
“Of late, there have been significant market disruptions hampering the functioning of these terminals. It is difficult to manage risk due to court orders banning the import/export of cargo, government policies discouraging imports and significant disruptions in market conditions,” the Indian Private Ports and Terminals Association (IPPTA) wrote in a May 9 letter to the ministry of ports, shipping and waterways.
PPP terminals that have suffered from market disruptions include the Adani Vizag Coal Terminal Pvt Ltd and the Vedanta Group-run Vizag General Cargo Berth Pvt Ltd, both at Visakhapatnam Port Trust, among others.
Since last year, a slew of policy reforms introduced by coal, power, environment, forest and climate change ministries, as part of the ‘Atmanirbhar Bharat’ initiatives, to promote domestic coal availability and utilization, have led to lower import coal volumes, putting the survival of import coal handling terminals at stake.
Due to the policy changes along with the Covid-19 situation, the thermal/steam coal traffic in FY21 declined by 78% in Kolkata Port, 43% in Visakhapatnam Port, 30% in New Mangalore Port and 26% in Kamarajar Port. During FY21, the overall thermal/steam coal traffic declined by 15.4% in all the major ports.
The decline in import coal volumes will “further worsen in the future” and this was acknowledged in the Maritime India Vision 2030, a ten-year blue print for the country’s maritime sector, in the backdrop of the government initiatives on auction of coal mines and focus on renewable energy, alternative fuels.
The decline in volumes is also impacting the revenue share to the concessioning authority.
“These ongoing fundamental government policy changes were never envisaged by the concessionaries or the concessioning authorities during the bidding stage, rendering the terminals completely unutilized,” IPPTA said.
“If policy reforms in port sector do not match the pace of policy reforms in other sectors, they will generate non-performing assets and lead to a spate of disputes,” IPPTA said in the letter.
Policy intervention by the government for survival of single cargo handling terminals is essential to maximize the capacity utilisation of port assets and increase efficiencies which will also prevent public assets from becoming non-performing assets, IPPTA said, while emphasising the need to draw up revival plans for such terminals in the overall interests of the country.