Kandla Port Trust on expansion mode; eyes 180 mt capacity by 2020

In a bid to consolidate its position as one of the largest ports in India, Kandla Port Trust (KPT) is undertaking several measures including expansion of jetties, revision of rentals on storage and achieving higher discharge rates. 

The measures are collectively aimed at taking up KPT's total handling capacity from 120 million tonnes (MT) as on date to 180 mt by 2020. For this, KPT is enhancing both liquid and dry cargo handling capacities at the major port.

Among such measures include the recent revision of rental rates on storage which have been rationalised to Rs 130 per kiloliter (kl) per month, down from Rs 500 kl per month in recent past.  According to Ravi Parmar, chairman of KPT, the revision of rates alone have led to its profits jump by 100 per cent in financial year 2016-17 to close at Rs 700 crore. 

Having seen diversion of traffic and losing pace against other major ports in liquid and dry cargo, KPT is undertaking measures to regain its share. 

To begin with, since February this year, KPT started handling container cargo as well. With coastal movement of cargo, growth in container cargo would come to KPT, felt Parmar. "Container is the future of port business. If we are not in this crucial segment, we will lose out," Parmar told Business Standard.

Already this year from Kandla to Chabahar port in Iran, a 300 containers vessel has gone with a consignment of basmati rice. The Chabahar port is being jointly developed by KPT (40 per cent equity) along with JNPT (60 per cent equity).

However, in liquid cargo, lately Kandla port had begun witnessing storage capacity constraints that led to auctioning of plots for inviting more tank storage owners. As far as liquid cargo at KPT goes, there was a lack of storage facility and handling capacity. Lack of storage coupled with increased rental value, diverted some traffic to other ports.

"Kandla port is emerging as a hub for storage vegetable oils and chemicals. We took a strategic decision of more auction of plots for purpose of  tank storage. Our storage capacity was limited and import was higher. So there was no storage available. So whatever storage was available was given on a premium. Tank owners began charging higher rates making Kandla uncompetitive against other ports like Mundra and Hazira. 

The auctioning of plots would create additional capacity for 1.5 mt, leading to 2.5 mt of liquid storage capacity. In addition, rentals have also come down from Rs 500 kl per month to now Rs 130 kl per month, resulting in reversal of cargo diversion. As a result, in FY17, KPT handled 12 mt of liquid cargo, becoming a hub for vegetable oils and chemicals, which is up from 11.5 mt in FY16.

On the other hand, for handling capacity constraints, KPT is investing further in oil jetties. Currently, all the six oil jetties are almost fully occupied. However, KPT has begun planning for four new oil jetties which were delayed due to environmental clearance issues for the past two years or so.  

"This year jetty number 8 and 9 are likely to come on-stream, which will not only decongest but also reduce demurrage paid by shipping lines, thus making KPT more competitive vis-a-vis the nearby ports. KPT is also working on rationalisation of berths based on cranes etc to increase the efficiency parameters. A consultant has suggested rationalisation of pipeline structure for increasing efficiency," said Parmar, while adding that KPT has also signed a MoU with Essar Oil for a single berth mooring (SBM) of 25 mt at Vadinar.

The discharge rate has already been improved from 150 tonnes per hour (tph) to 450 tph at present. KPT aims to improve this to 800 tph by removing the redundant pipelines, laying new pipelines and increasing diameters of pipelines within one year. At a 450 tph discharge rate, KPT can handle 12 mt of cargo with a 99 per cent occupancy. The increase in discharge rate will also result in faster turnaround of cargo at the jetties. At 800 tph, it will only take six hours of turnaround time and raise capacity to 18 mt. 

For dry cargo, KPT is rationalising allocation of berths wherein it is handling less dense commodities like timber on older berths and dense commodities like steel on newer berths.  KPT is also planning two additional berths, that would add 9 mt additional capacity. This would result in KPT's dry bulk handling capacity to rise from current 120 mt capacity to 180 mt by 2020. 

Parmar said that the investment would depend on project structuring. As such, Rs 120 crore investment is planned for partial mechanisation of fertiliser handling that would reduce the turnaround time of rake from a week to 12 hours and eventually up to 6 hours. The cost reduction is estimated to be around Rs 70 per hour.

"This will make Kandla more competitive with nearby ports," Parmar added. KPT handles 3.5 mt of fertilisers, 6 mt of salt and 15.5 mt of coal as part of its dry bulk cargo. Apart from this, there is some iron ore, steel, minerals and granite cargo. 

Parmar estimates a project cost of Rs 500 crore for the 25 mt SBM with Essar, Rs 525 crore for two oil jetties of berth number 14 and 16 and another Rs 200 crore for oil jetties number eight and nine, apart from Rs 100 crore for improving operational efficiencies. 

"Investment will depend on project structuring wherein we could either do it through internal accruals or on a PPP mode. Depending on the market response, we will go for the investment. We will search for PPP partners who can operate and maintain," Parmar added. 

Meanwhile, Parmar said that KPT is also looking for a partner for setting up an LNG terminal even as Mundra has a headstart here, with a 3 mt LNG cargo for its terminal.