The Fitness Plan

 
In an age when being healthy is wealthy, the Indian government comes up with a plan to turn robust. The Shipping Ministry announces an agenda to get in shape within a decade. With a plan in place, it’s time to get set, go – to remove the flab, be fit and win the global race. 

 

by Radhika Rani G.

The epicentre of maritime trade has touched India and the country’s economic growth is set to inch up the curve the coming three decades. It is reason enough for both the government and the industry to be proactive with policies, plans and projects to make the best of the opportunities calling on our ports and shipping. As the clock ticks with athletic precision, it is time to be fit lest we miss the bus.

Given this thought, the Maritime Agenda 2010-2020 unveiled recently in New Delhi comes as the big plan ever to make Indian ports and shipping sectors competitive as trade enablers. The ambitious agenda focuses on all the key sectors, from port capacities to international cooperation, that need to evolve with growing exim and environment demands. 

The government believes the economic upsurge will be one of the important drivers for the growth of Indian ports. Also, technological changes in shipping and information technology will trigger growth and provide stimulus for cargo handling.

The Agenda therefore, says the Union Shipping Minister, will bring Indian ports on par with the best international ports in terms of performance and capacity. It will also increase coastal shipping and facilitate hassle-free multimodal transport besides promoting inland water ways for cargo movement. The ministry sounds keen to walk the talk. “We will bring out an annual report card on the maritime agenda every May up to 2020,” G K Vasan announces. 

The action plan mainly calls for an investment of Rs 5 lakh crore to create port capacity of 3200 million tonnes by the end of the decade and increase Indian tonnage besides size up coastal shipping, inland waterways, shipbuilding and strengthen human resources. “We do not need high amount of government support but there is a need for private investment,” the minister reiterates.

Of the projected outlay, a major chunk will come from the private sector, says Shipping Secretary K Mohandas. While Rs 3 lakh crore will be spent on improving cargo handling capacities in ports, the remaining Rs 2 lakh crore will be used for increasing tonnage under the Indian flag and control. This in a nutshell is the plan to meet India’s export potential and import dependence through maritime muscle and to thrive healthy and happening.

The need for one

Policies and norms concerning port and shipping operations have been discussed for quite some time in various forums to let wider participation of players in Indian ports and shipping. Experts and advisers have felt the need for the government to revisit the dated practices, reform the existing ones and restructure those for the future. And the last two years saw the reforms process gather momentum and come out with a few statements on industry- and investment-friendly policies.

To make the process of private investment hassle-free, the ministry has reformed and standardised several norms. The process however needs continuous review and improvement, the ministry admits. 

In the wake of ports growing in number, size and spread, the policy on the monopoly in the ports sector too has come in for review and so did the land policy and the issue of port management or corporatisation. 

As national security, quality of service and quantity of tariff are being discussed, the ministry is reviewing the proposal for renewed norms and standards to bring in a uniform regulatory regime. “All the ports should be left free to fix their tariff, depending upon inter-play of market forces. The regulator can be entrusted with the responsibility of dispute resolution as appropriate,” Vasan says. Also, a near future development could be the merging of the Indian Ports Act 1908 and the Major Ports Trust Act 1963 into India Ports Bill to simplify port regulation.

There are again several other areas where reforms are being sought, such as coastal shipping, Cabotage law, Shipping Trade Practices Bill, shipbuilding, shipbreaking, environment and so on. “We are working on them in a steady manner,” informs Mohandas.

The ministry will be drafting a coastal shipping policy and a transshipment policy to relax Cabotage laws for promoting transshipment ports. Currently, work on the International Container Transshipment Terminal in Vallarpadam, Kochi is going on. “The port will be inaugurated by the Prime Minister in the second week of February 2011,” the minister notes.

In the wake of investor-interest, the government hopes to persist with a transparent and well-defined process. While the National Maritime Development Policy encouraged private investments in port projects to meet medium and long-term objectives besides meeting service quality and competitiveness, its timeline expires in 2012. The agenda is therefore the new avatar designed to meet the ‘one-size fits-all’ bill.

What’s in it

Well, like any comprehensive document with a vision and strategy, the agenda underlines the fillip that key segments need. At the outset, the minister spells out the goal targeted for the end of 2020:

• Create port capacity of 3200 MT for handling 2500 MT of cargo (Rs 3 lakh crore investment)
• Increase tonnage under Indian flag and Indian control (Rs 1.2 lakh crore)
• Increase India’s share in global ship building to 5 per cent
• Increase the strength of Indian seafarers to 9 per cent of the global strength by 2015 and sustain above this level.

These well-intended aspirations could make the sector a name to reckon with in the global scenario. However, speed is a challenge at this juncture when several NMDP projects are yet to materialise. The Shipping Secretary, in his recent interview to Maritime Gateway, admits quick action is indeed a matter of concern. “We have been working to do things fast. But all said and done, what is important is that the delivery of service has to keep pace with the requirement,” he stresses. 

Experts too, while supporting the government initiatives, are apprehensive of projects overshooting timelines. Indian maritime sector, says iMaritime report, has all the ingredients to become competitive in the global market place. “However, it requires vision, determination, innovation, and above all considerable planned diligence – to achieve this competitiveness in its entirety.”

While the present policies are dynamic and investor-friendly, more path-breaking initiatives are required to boost the ports sector to the anticipated levels of growth in terms of traffic as well as capacity, the ministry notes in the vision document. “It is necessary to review the policies periodically, say once in three years, to keep them relevant in changing times.”

Although the minister is practical enough in announcing a score card on the agenda every year, one hopes the review process does not remain mere wishful thinking given the inertia of projects. According to Union Minister of Commerce & Industry Anand Sharma, the country's foreign direct investment inflows were in excess of US$ 100 billion during the last three years and hopes they will touch US$ 250 billion in the next five years.

“In the next decade, India is set to absorb an investment of over US$ 1.7 trillion in infrastructure alone,” he announces. 

Despite fund flows into various projects, including ports and captive industries around them, apprehensions stem from the past profile of project development in India and the dissatisfaction voiced by investors on the pace of projects. There have been instances of investors backing out of projects that remained a non-starter. As experts rightly point out, periods of rising interest rates have made it difficult for infrastructure developers to raise funding capital.

Let’s do it

While the concern is about the value for money and effort lost in dilemmas and delays, it is time for some real action – for people involved in planning and execution to get their act right.

For instance, though the Korean Steel major POSCO’s proposed project in Orissa hangs in the air for want of environmental clearance, the commerce minister backs such project and other highest-quality missions on the belief that bilateral trade and thereby investments form the corner stone of India's development policy. 

The POSCO Project, he informs, will not only produce 12 million tonnes of steel, bringing in an FDI of over US$ 12 billion, but will also create nearly 50,000 direct and indirect jobs in the long term. Such a project will also have considerable spinoff for large-scale mineral development, infrastructure development through captive port, road hubs, downstream activities in automobile and construction, the minister adds. 

With the power, roads and telecommunications sectors showing a promising growth over the next seven years, the government could open itself for discussion and debate with stakeholders for scripting a successful India Inc story.

According to analyst Susanta Mazumdar, macro concerns remain, particularly as to the Indian fiscal situation and inflation. “But infrastructure assets tend to offer relatively high pricing power, and assets with pricing power and stable regulatory regimes also typically exhibit high inflation protection.” The Indian focus on infrastructure is very much a long-term-growth theme, which is only at the beginning of a long and sustainable cycle, Susanta adds.

The zest is evident from the government’s eagerness to welcome multinationals to invest in fast-paced infrastructure projects like dedicated freight corridors, subway lines and SEZs under a public-private partnership model. For instance, the Consulate General of India in Shanghai has invited Chinese investors to ‘go-global’ with India. 

“With a combination of factors such as macro-economic stability, consistent growth, abundant skilled manpower, well-developed banking and judicial system, vibrant capital market and its large-scale investment absorption capacity, India offers attractive returns to prospective investors," Consul General Riva Ganguly Das promised a keen audience. 

The maritime agenda therefore comes at an opportune time and the ministry hopes to allay any fear and come clear on taking the cause of maritime development forward. A sense of partisanship and openness can unite the stakeholders on to a common cause and result in fruitful action and accountability. So, it’s time for all the players concerned to pull up socks and sprint together towards the finish line.

No trace of UAE ship captured by pirates

Quote on piracy in The Khaleej Times.

No trace of UAE ship captured
 by pirates

Mundra - The Goldmine

An arid zone that turns into a pot of gold may sound a myth but Mundra demystifies the art of striking gold through a clear vision, mission and sheer perseverance. A port that drives a business empire and marvels the world is worth a peek into.

by Radhika Rani G.

As the Adani aircraft hovers over Mundra, the Mida’s touch of the Man of Aces glitters through the sprawling port arena. The buzz of men and machines working in unison and with precision seems as normal as the glimpse of sunset and sunrise. 

This business-as-usual attitude of people at work under a gleaming sun symbolises the race against time. It goes on to tell a tacit tale of once-upon-a-time barren land turning into a multidimensional port entity in just a decade! The story only grows racy with more people and activity joining the plot or rather the port.

The awe factor overwhelms even the men in action. “Mundra is growing right in front of us. But every month, we find surprises – a new building here, a container freight station there,” muses Anand Marathe, associate general manager at the liquid terminal.

Marathe has been working since 1999, just a year after the port started with two berths on the outer basin and the liquid terminal set off with a capacity of 1 lakh kilolitres. “Each year, we went on increasing capacity in the enclosures. Skilled staff too started going up.”

Today, the tank farms with 73 tanks can store 3,42,000 kilolitres of edible oils, petroleum products and chemicals. “The development is ongoing,” Marathe observes. He stands justified as the sight of well-engineered facilities all around and some more in the making make sense. New tank farms, especially for bunkers, naphtha and kerosene, will be coming up soon, he says. The terminal is just part of a larger port story unraveling each day.

Revving up

Elsewhere in the West Basin, the dedicated import coal handling terminal goes full steam in a phased manner with two deep-water offshore berths coming up in record time. With a 17.3-metre draft that can handle capesize vessels, the mammoth West Port is by far the most cherished story for the workforce. The facility, they say, will help Mundra handle more than 20 million tonnes of coal imports, up from 14 million tonnes last year, to feed power plants operated by utility firm Tata Power and sister company Adani Power.

Buoyed with enthusiasm, the staff top-down is keen to talk projects and targets. Alkesh Vikaria, a junior-level officer working in the project planning and control at the West Basin, reels off figures with ease. “We are developing 19 berths at the West Basin. For this, we are dredging a 3.5-km long, 360-m wide and 21-m deep approach channel. We can have vessels up to 2 lakh DWT. The rock bund is 5 km long made with 30 lakh metric tonnes of stone and completed just in nine months – the fastest made here,” he sums up with a sense of accomplishment, even as he prods his Mukesh 'Sir', DGM-Civil, to narrate further.

Running swift

Taking projects to the next quick level of innovation and excellence seems commonplace as managers discuss automation and efficiency. Capt Anurag Bhagauliwal, in-charge of the steel and project cargo division, says, “We have the vision to make Mundra steel yard the world’s best in the next 6-7 months.” By December this year, he hopes the fully automated steel yard will be safer, faster and cost-effective where pipes will be lifted by vacuum spreaders, multiple lifts with no labour intervention. “We are mapping the productivity levels – handling 6,000-7,000 tonnes of pipes per day and 28,000 tonnes of coil.”

With value for money coming its way, the trade is keen to take the road to Mundra. Or rather the rail! A large number of CFSs have been coming up in the Kutch region to cater to the growing profile of cargo. “Over the past decade,” says Samir Shah of JBS Group of Companies, “forwarders, custom house agents and other service providers have developed the ability to be in a position to serve both export and import cargoes.”

However, the port can still improve and maintain its last-mile connectivity as a continuous process, he opines. “Additionally, it can, with the help of the local administration, stop unregulated development outside and develop it for large infrastructure projects besides taking up large-scale CSR with quantifiable deliverables,” he adds.

Sustaining spirit

Despite fame-induced delays disrupting growth plans, the work-is-everything and all-for-one attitude echoes in Adani House – the swanky administrative block of the port. Hosting a growing number of visitors, the House, as the staff calls it, rather talks the walk – exuding an air of discipline and empowered work culture that trickles through other on-field departments.
For Capt Unmesh Abhyankar, Chief Operating Officer, meeting guests and deadlines is all in a day’s work. 

Having been with Mundra since 2005 and setting into motion the single-point mooring facility, he exudes the joy of playing a key role in several other milestones and sharing the success story he was part of. “The port has continuously seen growth in terms of the number of vessels handled, 20 per cent to be precise, cargo throughput achieved and turnaround time decreased. Also the size of the vessels has increased over a period of time,” he informs. He and his staff feel elated that the 322-m long, 8,500-TEU Northern Jaguar of MSC Lines called the port – the largest container vessel to have touched any Indian harbour so far.

Adding many other firsts to its kitty (see highlights), the port now serves as the hub to the group’s power, energy, mining, oil & gas, agri-business and FMCG. The leader Rajeeva Sinha believes such mutual growth is the USP of the Adani business.

Coal mines, ports, power plants and shipping have a connect and so “the logic is to help all our businesses to help other businesses of the group,” the director of the MPSEZ says. The idea of integration seems to pay off as the Adani Enterprises could consolidate its position and take its net profit to Rs 2,476 crore in FY11, up a whopping 169 per cent yoy.

Moving up

“We believe in a non-bureaucratic and result-oriented work culture,” points out Manoj Sharma, Vice President with Adani Power Ltd, who has been overseeing human resource management.

“Our wide scale of businesses and pace of growth present a range of opportunities and exposure,” he says as he cites himself as example, being the senior vice-president of corporate human resources earlier before moving to the current portfolio.

Such non-linear approach is what has made Abhijitsinh Jadeja the commodity manager in dry cargo operations at the port. Taking on his first job at Mundra post MBA, he plays a key role in the team that is working towards a target of handling 50 million metric tonnes of minerals, fertilisers, agro products, timber and steel products.

Such a rookie-rocking account is common among the 8,500 workforce in the group and the HR team is busy adding more numbers each day. “This job came as one of my best opportunities and platforms to jumpstart my career,” he says and hopes to make a better contribution and be a part of the success of the group.

With the stage set, the men in blue are all game for the alchemy of striking gold. For them, the Man and the Mida’s touch are just irresistible.

Note: Mundra Port renamed Adani Port in January 2012.

Article published in:

http://www.maritimegateway.com/mgw/index.php?option=com_content&view=article&id=438:mundra-the-goldmine&catid=34:rokstories

Let’s Barge In

History stands testimony to a definite correlation between the development of a state and its use of waterways. While it is accepted that inland waterways are cost-effective and environment-friendly and can serve the logistics needs of India, they are yet to grow as commercially viable mode of transportation for our trade. So, how can we tap the potential? What needs to be done? A quick look at the issues, news and views.

by Radhika Rani G.

The recent launch of the International Container Transshipment Terminal by the prime minister of India reaffirms the key role of inland waterways in serving the hub and spoke model in multimodal logistics transport. Reiterating the function of such water-based transport as the catalyst in exim trade, Dr Manmohan Singh hopes that the two ro-ro jetties at Bolgatty and Wellingdon Islands will improve the connectivity with the Vallarpadam hub.

The Inland Waterways Authority of India (IWAI) has developed the roll on-roll off facility at the two islands in collaboration with Cochin Port Trust. Inland waterways, the prime minister stresses, are quite suitable for transport of cargo enormous both in nature and volume. Terming it as fuel-efficient, environment-friendly and safe, Dr Singh notes that it is suitable for bulk, containerised and hazardous cargo as is the case worldwide.

The observation comes at a time when India is grappling with logistics challenges in the face of growing volumes of freight movement in all directions. To address the increasing demand and pressure on surface modes of transportation in India, the Maritime Agenda for 2010-2020, apart from focussing on improving the existing three major waterways, also envisages:

• Development of IWT infrastructure

• Declaration of River Barak as National Waterway No.6

• Development of National Waterways 4 & 5

• Extension of National Waterway No. 3 in Kerala

While the National Waterways are viewed as desirable routes, the argument that they can reduce shipping and transaction costs is yet to gain prominence. Even as operators voice concerns and the IWAI looks into the matter, thrust is being laid on NW-4 and NW-5 in the present Plan.

It is often mentioned that railways and roads together cater to nearly 90 per cent of cargo transport in the country, but inland waterways move less than 1 per cent. With a well-devised plan in place and a government body to take the initiative forward, how can it be made a commercially viable mode of cargo transport?

Promoting the viable mode

To start with, the private sector can provide the impetus, states Chairperson of IWAI, Bhupinder Prasad, alluding to the enhanced use of this sector. Like in all capacity-building ventures of the maritime sector, participation of private players as stakeholders, she says, can make the difference. For instance, in NW-2 that caters to the Northeast region, “the private sector can come forward to take advantage of the naturally endowed network of rivers,” Bhupinder opines.

As the region is endowed with natural resources and buzzes with industrial activity, bulk cargo like coal, cement, steel, fertilisers, petroleum products besides containers and overdimensional cargo can be ferried safe through inland waterways. As a trial run to Kolkata, the IWAI chief has recently flagged off two jute-laden cargo vessels at Pandu Port near Guwahati.

However, IWAI officials point out that despite installing permanent terminals such as RCC jetties at Patna and Pandu, hardly a single cargo or container has been loaded or unloaded from there in the recent past. And when the IWAI goes to the Planning Commission, it is asked to give figures of the cargo load moving in the region. So, it is more a chicken and egg story, they say.

The Planning Commission suggests that private players be rather invited to take part in the development of the six national inland waterways as part of the Eleventh Five Year Plan. The PPP model should be followed to ensure a win-win proposition for all. As for developing NW 4 and 5 with a combined length of 1,700 km and at a cost of Rs 500 crore, the Commission has reportedly turned down the ministry of shipping’s proposal.

On the other hand, the private sector is wary of investing, thanks to the absence of a concrete groundwork happening in the sector.

Experts point out that waterways transport can be effective when the source and destination or rather the first and the last mile connectivity are waterfront locations. In IWT, availability of the waterway, terminal facilities like jetties and ports, barges and other vessels capable of navigation, and finally the management component affect the economics and operation of the transport, observe Narayan Rangaraj and G Raghuram in their report on the viability of IWT in India.

Referring to the concerns of vessel operators, the IWAI chief says, “Our mandate under the ministry of shipping is to provide infrastructure facilities such as navigable routes, terminals and cargo handling facilities.” For instance, floating terminals were set up along the 891-km stretch of Brahmaputra touching seven downstream ports in Assam.

And now efforts are on to utilise the strategic Pandu Port, one of the historic ports in Assam since the British rule till 1965, that was closed down during the Indo-Pak war in the 70s when the trade route to Bangladesh was shut. With India showing interest to develop this inland water transit as part of the Indo-Bangladesh Waterways Protocol, Dhaka is considering the proposal to renew the protocol for five years, instead of the usual two years.

Ironically, despite the presence of floating terminals with crane facility at more than seven locations on the Ganga river, experts point out that there is no vessel movement taking place. So, where does the problem really lie?

Funding issues

The issues seem to range from infrastructure to integration. As any trader or industrialist would like to move cargo in a cost-effective manner and inland waterways promise to be such, the government needs to plug the gaps by spending enough, say experts. Roads and railways have been getting funds for national highways and national freight corridor. But there is no appreciable investment in inland waterways, they say. “The IWAI has spent only Rs 800 crore for the development of waterways countrywide since its inception in 1986,” Bhupinder Prasad informs.

Funds are an issue for vessel acquisition too. Operators would like to have an investor who can come forward to finance small ships. Shashi S K Shahi, Chairman and Managing Director of SKS Logistics, hints at the absence of a dedicated finance institution to finance vessels for both inland waterways and coastal shipping. “We go to different banks and they want to know what is inland waterways. In the bargain, the process is delayed for six months,” he says.

“The finance for inland waterways and coastal shipping should be financed in 15 days,” Shahi adds. Also, there is a need for venture capitalists to come into the inland and coastal shipping sector, say a few financial experts.

Technical issues

However, funds are not the problem alone. There are several inherent issues specific to a region, such as irregular siltation. Other crucial ones are technical in nature and call for engineering skills, says H B Ganguly, Vice President – Hydro of Jindal Power Ltd. “As operators, we need a guaranteed LAD (least available depth) and this should be maintained throughout the year, irrespective of the water flow in the river.” This is indeed a challenge in the Ganga as it, being the headwaters of the Himalayas, faces a rough current for most part of the year. And dredging here to maintain a navigable draft is a herculean task, agree both operators and the authorities.

The dredging problem, experts say, increases manifold upstream of Patna and Ghazipur. In fact, a feasibility study is being undertaken by the IWAI to understand if making two or three barrages at Ghazipur and Chunar with navigation locks will make it feasible to have a 3-metre LAD right up to Varanasi or even Allahabad. The IWAI is also exploring the possibility of building five barrages on the Brahmani river in the Mahanadi waterway with navigation locks to ensure an assured LAD of more than 2 metre throughout the year.

While the DPR (detailed project report) calls for over Rs 2,000 crore for the task, the IWAI is talking to stakeholders to know their requirement for 2 or 3-metre LAD. Seeking the industry opinion helps, says Shahi. “And the improvement in waterways administration has been visible over the last five year,” he observes.

Innovative locking systems make navigation possible and the model is being successfully implemented in the Mississippi waterway in the United States. The inland and intracoastal waterway system there handles about 630 million tonnes of cargo annually, or about 17 per cent of all intercity freight by volume. Such an engineering solution can be developed for India’s waterways too by taking up navigation improvement feasibility studies, opines Ganguly.

Barges have been the backbone for the movement of bulk commodities and raw materials at relatively low cost. For instance, barges have been the lifeline of Mormugao Port transporting 50 million tonnes of iron ore in eight months time during the favourable season. Development of barging is the heart for Kolkata Port too since barges there have the capacity to move 40 million tonnes of cargo for the port.

But lack of enough terminals for barge loading and unloading and absence of proper berthing arrangements, reservation and storage areas have been an issue for long. With several industries coming up along India’s coastline, there is a need to provide for the terminals. “We need to do something about it. A terminal for barge loading and unloading can come up every 100 nautical miles, like a railway siding, for moving cargo wherever an industry is situated,” suggests Shahi.

As for taxes, vessel operators say too many taxes can kill the spirit of inland movement. They want the government to impose service taxes only once a year and not at every port of call. And with regard to port charges increasing frequently for inland vessels in Gujarat and Maharashtra, they suggest that the tariff be directly proportional to the development taking place at the ports. “Also, traffic potential can be professionally assessed with a competitive perspective in these dimensions: Origin-Destination flows; Commodity-wise flows and values, and Revenue potential.” With the barge owners association active in Goa, the local revenue model there one way of doing this, they add.

On the brighter side, the ministry says there had been many successful movements of Over Dimensional Cargo (ODC) on NW-1, 2, and 3 in the last two years and expects that ODC movement on NWs will increase substantially in the coming years. In view of this, IWAI has started levying user charges at Rs 1.5 per tonne per km for OCD movement on NW-1, 2 and 3 from January 1, 2010.

Another major issue concerns the non-availability of ship repair facility in the vicinity of a port. Inland shipowners say they cannot repair a vessel within 15-30 days at a port. In the present circumstances, it takes nearly three months to repair a vessel and a lot of time and revenue is lost in the process.

Sailing ahead

Despite the ups and lows, Shahi sees inland waterways improving tremendously during the recent past. “Having been in the coastal business for the last 20 years, I can say that while there was only talk on the paper previously, the government is actually implementing trade-friendly initiatives these days,” he says. “It is like taking one step forward and getting thousand steps completed,” he sums up.

According to IWAI, development programmes of the waterways are strategies that have been decided by experts over a period of time and they have the approval of all the competent authorities. But we are not able to capitalise on the opportunity in the country, say experts.

We are missing the moot point, says Manish Saigal, executive director of KPMG. The fact that we depend 6 per cent on coastal shipping and less than 1 per cent on river, prompts us to make the best use of the opportunity, he says. With companies like NTPC requiring 3 million tonnes of coal for its power project in the Northeast, operators can hope to move the cargo through inland waterways and provide the lifeline for barges.

As for sops, the ministry proposes to introduce incentives to IWT entrepreneurs at 20 paisa/ tonne km for the movement of cargo through the national waterways. But experts say the industry stops being efficient if incentives are provided.

Among the other initiatives that the government hopes to implement in this decade are: state-level crew training centres in close interaction with NINI, Patna, promotion of river cruises and modernisation and improvement of country boats in the Northeast and other navigational areas.

So in the final count, introspection and debate have brought out a vision. And now, a firm plan too is in place. While only action needs to flow out of paper, interaction among all the stakeholders, including central ministries, IWAI, barge operators, shippers, mine owners, Bangladesh operators and the respective state governments can bring out amicable solutions. And go a long way in letting the barges into our inland water streams, big time.

Managing Change: Getting It Right

The Ministry of Shipping is keen to corporatise major ports as part of Maritime Agenda 2020. Though corporatisation aims to reduce the bureaucracy while allowing the government to retain ownership of the corporate entity, walking the theory is a tactful act indeed. But the roadmap is clear and the change agent is sure to come, sooner or later.

by Radhika Rani G.

Media reports have been mentioning for some time that “the much-awaited corporatisation of Jawaharlal Nehru Port Trust (JNPT) will be carried out by the end of the calendar year 2011.” The Shipping Ministry too has been stating that a decision was taken in principle, after consulting port management experts, to corporatise the major ports in a phased manner.

The government is keen to bring in a sleek corporate model for ports to thrive in a competitive economy, especially when private ports are coming up close to the federal ones and making money through exim activity. “It is necessary,” says Shipping Secretary K Mohandas, “that major ports are also prepared fully in terms of organisation, financial self-sufficiency and efficiency to face the competition.”

Since a port is not really a social entity, but more or less a commercial venture and an infrastructure service provider which has to function on a profit-making basis, the ministry believes the time is right to convert ports into corporate structures. “These enterprises,” the ministry clarifies, “with financial and functional self-rule will still be fully owned by the government.”

Fears & doubts

But a notional roadmap at the moment has been causing a sense of insecurity in direct stakeholders, especially officers and grassroots workers on the waterfront. They fear impending privatisation of the port and loss of employment. “We will lose our land and livelihood,” says Dinesh Patil, president of JNPT Kamgar Ekta Sanghatan. The workers activist tells Maritime Gateway that the fate of 1,500 permanent workers of the port hangs in the balance as the Central government that bartered their land with jobs and promise of sops is now putting their future in question.

His views are supported by Bhushan Patil, general secretary of Nhava-Sheva Bandar Kamgar Sanghatana. Bhushan sees corporatisation as the first step towards privatisation. “It will open the door of the port estate and property belonging to the present board of trustees to private ports operators, who will eventually gain control,” he says.

To enable a dialogue on the issue and a consensus thereby, a meeting has been scheduled between the chief labour commissioner of the labour ministry and the five recognised workers unions. Representatives of the Water Transport Workers, All India Port & Dock Workers, All India Port & Dock Workers’ Federation; Port, Dock & Waterfront Workers’ Federation and Indian National Port & Dock Workers' Federation, will meet the CLC on June 6 to discuss issues threadbare and clear ambiguities.

“Our agenda is to safeguard the interests of our members,” say the Patils, both labour trustees on the JNPT board. The deliberations, they express hope, will result in a win-win for them and the government.

Process in motion

Considering that the government has consulted experts and studied port management models before coming up with a workable port structure, it could have set off corporatisation through a more consultative process, say industry leaders. While the move is definitely welcome, says B Sridhar, India director of Bengal Tiger Lines, there is bound to be reluctance on the part of labour unions.

Being the largest port in India handling 65 per cent of the country’s container traffic, JN Port, a 22-year-old entity has over the years developed its own worker legacy. And breaking the ice with them is quite a task. “The government might succeed in changing the legal status of the port, but it has to take extra efforts to change the mindset of the people working there,” opines Shashank Kulkarni, secretary general of Indian Private Ports & Terminals Association.

India has been resolving workers issues since 1991 when it started economic reforms through neo-liberal policies. Yet, creation of a congenial atmosphere for transition in today’s market economy is still beset with communication issues. Stakeholders complain that they have not been taken into confidence and so ignorance and resistance prevails among them.

“A separate taskforce could therefore have been established with competent people who can take the process forward,” says Sridhar. The senior management of the port, say sources, is working on these lines.

Post-transition, major ports might require no immediate change functionally and operationally. But a positive mindset does matter down the order. “So empowering the management to do business in the second decade of the 21 century is vital,” admits the Shipping Secretary.

But how can the transition of ports be smooth? “This is simple,” says S N Srikanth of Hauer Associates. “Firstly, the government must give far greater administrative freedom to the port trusts once corporatised. Secondly, industry professional must head the corporatised ports,” says the expert in port policy and development.

Such a model holds great promise for critical ports like JNP and Chennai, where quick decision-making and trouble-shooting are required. For instance, important decisions on expansion plans or dredging at JNP have been veering in a labyrinth of things owing to roadblock on the government front. “Given the situation, a corporate structure ensures a freer hand for the port management. It also makes the officials accountable,” says Capt R R Iyer of Seahorse Ship Agencies.

Exploring the options

Several stakeholders, content with the status quo, suggest that innovative functioning amendments can be introduced that do not drastically affect the work model or morale.

According to a study by the Public-Private Infrastructure Advisory Facility, there are two types of corporatisation models. The first model’s goal is to transform former statutory authorities into government-owned enterprises – this means that a corporatised port authority would have a constitution consisting of a memorandum and articles of association that define the nature of the company and the manner in which the affairs of the company are to be conducted based on the ‘companies act’ or ‘corporations act’ in force.

The second model involves the creation of a statutory government-owned enterprise (corporation) by specific legislation. This would mean that there is the potential for some degree of public (national, regional, or municipal) input and scrutiny. It also means the introduction of tailor-made provisions, such as those relating to accountability and public control.

However, the most problematic issue affecting corporatised port authorities is the mix of public and private objectives, the PPIAF study says. “The rationale behind this type of reform is the expectation that corporatised ports operate as viable and effective businesses. However, while part of the ports’ enabling legislation may state that they should pursue commercial objectives and operate as effective businesses, the public shareholders have responsibilities other than strictly commercial ones, such as the delivery of public goods.”

Ultimately, the choice of one of the alternative models when corporatising a public port authority is a political issue, the PPIAF study adds.

The JNPT workers union staunchly believes that the government, instead of scrapping port trusts to introduce corporate boards, could give more autonomy to the existing board of trustees. If need be, the board could draw members from the ministries of finance, shipping, commerce and allied departments for diverse representation and informed decision-making, Dinesh Patil adds.

The existing ports, according to Sridhar, can still be run as corporate bodies wherein accountability and port performance can be enhanced. “This can be done by bringing in professionals onto port management boards,” he opines. The shipping ministry, on its part, is not averse to the idea. It says independent professionals are rarely nominated to port trusts and can be brought on board to seek valued inputs for better port functioning. But attracting them onto an evolving CEO-director model, in the midst of competition, is quite a task.

The tight fit

New generation ports being run as body corporates have been making inroads in throughput and profits while maintaining economies of scale. On the other hand, major ports though handling 74 per cent of India’s cargo traffic are yet to sustain growth levels and meet global standards.

A pruned structure seems to fit the bill. For example, Ennore Port has only 90 enrolled staff. “As we handle PPP-driven projects, we continue to stay trim,” says PRO Atchayanathan. But other major ports too have been cutting their size by freezing on fresh recruitment, points out a senior representative of the Transport and Dock Workers Union. “Mumbai Port has not been recruiting organised workers since 1991. This could be the case with other major ports too,” he adds.

Still, a slim structure is an advantage for Ennore. “Ours is a no-strike, no-lockout model,” elaborates Atchayanathan drawing attention to productivity and profits. The port works on a landlord model, just as 88 out of 100 around the world do. It was recently conferred with Mini Ratna status by the Government of India for its impressive performance. The 10-year-old port could attract an investment of Rs 1,200 crore on various terminals and harbour crafts from private entrepreneurs and maintain a low operating ratio at 25.80 per cent during 2008-09.

But analysts point out that Ennore Port, despite having started big amid great expectations, is yet to reach the desired level. Though terminals for car, coal and iron ore exports and connectivity projects for rail and road are being developed, its Rs 41.46-crore profit for the financial year 2009 is way short of potential.

Similar doubts are being expressed about ports going the landlord way. But JNP is a class of its own, says an industry observer. “Since the port is the destination choice of importers and exporters, it can perform better and promise great results through an overhaul.”

“India’s experiments with corporatisation, says Srikanth, “have been mixed at best, since the government refuses to let go of its hold on the corporation. Ennore Port is a good example.” Where India is concerned, there appears to be little benefit in corporatising ports without privatising them, he says. “Corporatisation in India should be seen as a step towards privatisation. Any protestations to the contrary lack credibility.”

The question therefore seems not so much about the new setup as about making the most of it as a good-fit money-making model – where headlines are made and heads can roll. So, at the end of the day, it’s a tactful walking of the corporate talk and giving sure answers to rapidfire questions like “What are the deliverables?,” “Show me the money” or else “You are fired!”