Private port operators seek govt intervention as policy changes

25 May 2021 CW Team

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 concessionaire bears traffic risk, whereas the concessioning authority secures revenue through a minimum guaranteed cargo mechanism.

According to the IPPTA, there have been significant market disruptions hampering the functioning of these terminals. In its letter to the Ministry of Ports Shipping and Waterways (MoPSW), the association cited that 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.

PPP terminals that have suffered from market disruptions include the Adani Vizag Coal Terminal and the Vedanta Group-run Vizag General Cargo Berth Pvt, both at Visakhapatnam Port Trust, among others.

Since 2020, a series 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 utilisation, have led to lower import coal volumes, putting the survival of import coal handling terminals at stake.

Due to the policy changes and the Covid-19 situation, the thermal/steam coal traffic in FY21 declined by 30% in New Mangalore Port, 43% in Visakhapatnam Port, 78% in Kolkata Port, and 26% in Kamarajar Port. During FY21, the overall thermal/steam coal traffic declined by 15.4% in all the major ports.

Policy intervention by the government for survival of single cargo handling terminals is essential to maximise the capacity utilisation of port assets and boost efficiencies which will also prevent public assets from becoming non-performing assets (NPAs), IPPTA said, while stressing on the need to draw up revival plans for such terminals in the overall interests of the country.

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Also read: Ports sector witnesses downside risks along with recovery: Care

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A group of Indian private terminal operators—Indian Private Ports and Terminals Association (IPPTA)—has sought the government’s intervention to permit 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 concessionaire bears traffic risk, whereas the concessioning authority secures revenue through a minimum guaranteed cargo mechanism. According to the IPPTA, there have been significant market disruptions hampering the functioning of these terminals. In its letter to the Ministry of Ports Shipping and Waterways (MoPSW), the association cited that 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. PPP terminals that have suffered from market disruptions include the Adani Vizag Coal Terminal and the Vedanta Group-run Vizag General Cargo Berth Pvt, both at Visakhapatnam Port Trust, among others. Since 2020, a series 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 utilisation, have led to lower import coal volumes, putting the survival of import coal handling terminals at stake. Due to the policy changes and the Covid-19 situation, the thermal/steam coal traffic in FY21 declined by 30% in New Mangalore Port, 43% in Visakhapatnam Port, 78% in Kolkata Port, and 26% in Kamarajar Port. During FY21, the overall thermal/steam coal traffic declined by 15.4% in all the major ports. Policy intervention by the government for survival of single cargo handling terminals is essential to maximise the capacity utilisation of port assets and boost efficiencies which will also prevent public assets from becoming non-performing assets (NPAs), IPPTA said, while stressing on the need to draw up revival plans for such terminals in the overall interests of the country. Image Source Also read: Ports sector witnesses downside risks along with recovery: Care

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