Private terminal operators seek stimulus as policy changes reduce freight
A lobby of Indian private terminal operators has called for government intervention to allow single cargo handling terminals to handle multiple products at major ports.
Some public-private partnership (PPP) concessions in large ports allow operators to process only one product such as coal, iron ore, etc. PPP projects are structured so that the traffic risk is borne by the concessionaire, while the licensing authority secures revenues through a guaranteed minimum freight mechanism.
“Lately, major market disruptions have hampered the operation of these terminals. It is difficult to manage the risk due to court orders banning the import / export of goods, government policies discouraging imports and significant disruption of market conditions, ”wrote the Indian Ports and Terminals Association. private (IPPTA) in a letter of May 9 to the Ministry of Ports, Navigation and Waterways.
PPP terminals that have suffered from the market disruptions include Adani Vizag Coal Terminal Pvt Ltd and Vizag General Cargo Berth Pvt Ltd, operated by Vedanta Group, both at Visakhapatnam Port Trust, among others.
Since last year, a series of policy reforms introduced by the ministries of coal, energy, environment, forests and climate change, as part of the “ Atmanirbhar Bharat ” initiatives, to promote the availability and use of domestic coal, has led to a decline in coal import volumes, putting the survival of import coal handling terminals at stake.
Due to policy changes and the Covid-19 situation, thermal / steam coal traffic in FY21 decreased by 78% in the port of Kolkata, by 43% in the port of Visakhapatnam, by 30% in the new port Mangalore and 26% in the port of Kamarajar. In fiscal year 21, overall thermal / steam coal traffic decreased by 15.4% in all major ports.
The decline in the volumes of imported coal “will get even worse in the future” and this was recognized in the Maritime India Vision 2030, a ten-year master plan for the country’s maritime sector, in the context of government initiatives on the sale. coal mine auctions and focus on renewable energy, alternative fuels.
The drop in volumes also has an impact on the share of revenues accruing to the concessionaire.
“These ongoing fundamental government policy changes were never considered by concessionaires or licensing authorities during the bidding phase, rendering the terminals completely unused,” IPPTA said.
“If political reforms in the port sector do not match the pace of political reforms in other sectors, they will generate non-performing assets and lead to a wave of conflict,” IPPTA said in the letter.
Government policy intervention for the survival of single cargo handling terminals is essential to maximize the capacity utilization of port assets and increase efficiency, which will also prevent public assets from becoming non-performing assets, a said IPPTA, while stressing the need to develop recovery plans. for these terminals in the general interest of the country.