Policy frameworks that will enable growth of efficient port infrastructure and supply chain management need to be in place, says C Sasidhar, Managing Director, Krishnapatnam Port Company Limited
India has an impending need to build port infrastructure to nurture it’s economic growth? What are your views on this?
We are the world’s fastest-growing major economy. Today, ports in India have enough capacity to match trade demands. The capacity of the major ports as on March 31, 2016 has increased to 965 MTPA from 871.52MTPA in March, 2015. Whereas overall traffic handled by the major ports in FY16 has increased by 4.3 per cent to 606.37MT as compared to 581.34MT handled during the previous year 2014-15. As on today’s date concentration has to be on the strengthening the existing ports by modernization programmes and building strong hinterland connectivity. Improving the connectivity of ports with roads and railways will not only boost the export but it will further help ports to be able to use their maximum capacity. We need to look setting up industrial corridors surrounding the port area which will help in generating employment opportunities and also help the ports to increase their handling capacity.
The present government has laid down ambitious plans to build the India port infrastructure. Do you think the plans are achievable and what are the policy changes which are required to turn these plans into reality?
Government is very ambitious and laid down a plan under the larger umbrella of Sagarmala where it is talking about not only port modernization, rail and road connectivity, improving port efficiency but also empowering fishermen communities. The plan is extremely good but it needs to prioritize the projects, find resources and implement the plan in time bound manner. Otherwise the desired objectives may not be achieved.
These are all physical infrastructures. But government needs to seriously look at policy infrastructure. Policy frameworks that will enable growth of efficient port infrastructure and supply chain management need to be in place, if this ambitious plan has to work. To give a classic example, government still could not make up it’s mind on cabotage law which needs to be relaxed to make Indian ports as transshipment hubs.
There are multiple permissions needed, to be obtained from multiple ministries for a port to function smoothly and efficiently. All these need to be brought under one ministry and permissions should be given in a time bound banner which helps the ports to grow faster. Another important requirement is that there are several ancillary government officers need to be placed in and around ports depending on the nature of exports & imports. These officers also need to be available and function simultaneously with the commencement of port operations.
What are the major challenges for the port infrastructure growth in India?
Inadequate road networks within the port area, poor cargo-handling equipment and machinery, inefficiency due to poor hinterland connectivity through rail, road, highways, coastal shipping and inland waterways, weak navigational aids, facilities and IT systems, insufficient dredging capacity, and lack of technical expertise in handling large volumes among others are some key challenges in the industry today. Due to these several reasons the turnaround time at ports in India remains abysmal thus nudging the growth of port infrastructure.
What is the role Krishnapatnam Port Company (KPCL) would be playing in the India Infrastructure growth story?
I am very confident and happy to say that Krishnapatnam Port is playing an important role especially in the growth of south coastal districts of Andhra Pradesh and eastern Karnataka region. Port is growing rapidly and lot of industrialization happened in these regions because of this port. There are five power plants with nearly 60,000 crores of investment. More investments are coming into the power sector. Lot of edible oil plants have come up. So port is acting as true engine of growth. Job creation and social empowerment is happening simultaneously. More than 20,000 jobs have been created. Standard of living has gone up. According to state government figure Nellore is ranking 4th in the state in per capita income growth.
Over the years, instead of having ports close to your vicinity KPCL has reported steady growth in cargo volume. What all factors contributed for this steady growth?
It’s basically due to our customer-centric approach. We understand unique needs of each of the customer. We understand their concerns of cost and time and provide solutions, which addresses those concerns. We respect the safe handling, storage and delivery of cargo of customer. Due to this approach, even customers from other ports patronize us. We continuously improve the way we work and improve our efficiencies.
Coal is the bulk cargo Krishnapatnam Port handles, will there be any change in cargo shipment in the next two years?
Coal volumes are improving and they will continue to do so. But we are also witnessing steady growth in our container volumes. We see a good mix of cargo in future in the form of coal, fertilizer, edible oil, granite, other minerals and also manufactured goods.
KPCL has tied-up with Container Corporation of India to provide seamless movement of container traffic from the port to the hinterland by developing rail infrastructure, when is this project expected to commence? What would be total revenue generation from this project?
After the tie up with the Container Corporation we have developed the rail infrastructure that had helped to cater the needs of growing container at Krishnapatnam. Now, Krishnapatnam terminal has emerged as a hub port on the east coast of India, handling mother vessels. It has become a gateway to India and other South Asian/Southeast Asian countries. The joint venture has helped us deliver seamless, efficient supply chain solutions to the export-import fraternity while making India competitive for exports. To cite an example recent introduction of bi-weekly service from ICD Whitefield, Bengaluru to Krishnapatnam port significantly reduces the transit time of export commodities to less than 24 hours thereby reducing the logistic cost for exporters.
The phase II development of KPCL is currently under execution, what is the total outlay for this project? What all facilities are likely to come up and what will cargo handling capacity when completed?
Currently we have 10 berths and we have the potential to go upto 42 berths. We are planning and building the berths as per the cargo growth and demand.
In the last 8 years Krishnapatnam Port has become a strategic point for maritime trade in India. While we crossed the 40 million mark in tonnage just last fiscal, we aim to achieve the 100 million mark in the next five years. Our current focus is to reach out to the new regions of hinterland and service new cargoes and customers.
For the phase II development, KPCL has raised ` 800 crore from Strategic Port Investments KPC Limited. Is there any funding raising plan in the offing?
The total amount invested into the development of the port is in excess of ` 8,000 crore. While the company’s debt equity ratio is about 3:1, we had total borrowings of ` 6,000 crore and net worth of ` 2,000 crore. The company is looking to raise fresh funds to part-finance our expansion plans which may require over ` 8,000 crore. This could be a mix of equity or equity-linked instruments.
The AP government has given in-principle approval to KPCL to set up a floating storage and regasification terminal on BOST basis. What is the status of this project? When is the project likely to commence?
PetrogasPvt Ltd has joined hands with Krishnapatnam Port Co Ltd and the Andhra Pradesh government to set up a liquefied natural gas (LNG) regasfication and floating storage terminal at Krishnapatnam Port in Nellore district with an investment of around ` 3,000 crore.
Petrogas is joint venture of Isomeric Holdings bhd of Malaysia and LEPL Venture Pvt Ltd of Vijayawada, the company behind Air Costa. The Petrogas facility will initially have a capacity of five million tonnes per annum (mtpa) along with ancillary facilities like floating LNG storage tanks. The first phase of this project would cost $500 million.
The investment is likely to create 500 new jobs in the state. The project is estimated to start operations in three years, after which capacity will be raised in the next three years. Andhra Pradesh government will help with land acquisition and infrastructure development by providing incentives.
Can you please elaborate on the LNG Bharat Group’s LNG terminal coming up at Krishnapatnam Port? What developments are expected because of this terminal?
This LNG terminal will have a capacity of five million tonnes per annum. The company has taken 120 acres of land from the port and leased a berth for setting up the terminal. A 250 km long pipeline would be laid from Krishnapatnam to Ennore in Tamilnadu via Sullurpeta and Sri City. The construction would commence soon and project will be completed by December 2017. This could be the first LNG import terminal with its own associated gas pipeline to be commissioned on the east coast. This terminal will supply natural gas to industries in Rayalaseema, Krishnapatnam SEZ, Sri City SEZ, IFFCO SEZ and the industrial estates located in Mambattu&Gummidipoondi.
KPCL in association with the Andhra Pradesh government is planning smart city cum industrial area, what is the status of this project?
Krishnapatnam Port expects in the next six months to finish its land acquisition for the ` 11,000 crore smart city cum industrial area planned with the government. The company has already acquired 5,000 acres and will acquire 1,000 acres more.
The Andhra Pradesh government will provide an additional 8,000 acres. The Japan Industrial Co-operation Agency will help in raising funds. The project was among the ones announced in the 2014-15 Union Budget. This is expected to bring in major development in the Vizag-Chennai industrial corridor.
The industrial area will be set up at ChillakurMandal, Nellore. A host of projects, including auto ancillary, chemical, cold storage, container freight station, food processing, heavy machinery, IT/ITES, leathe, pharmaceuticals, refineries, warehousing, textile parks, residential complexes and educational facilities are planned in the area.
What are the new services started by KPCL in the last quarter?
Krishnapatnam Port has entered into a pact with Mearsk Line for commencing a new service from Salalah, Oman. It is a weekly service. This service will connect customers in the surrounding area of Andhra Pradesh, northern Tamil Nadu and eastern Karnataka directly to Oman and neighbouring region.
