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.