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Learning from Gujarat's port-led development

Coastal states to formulate maritime authority

Rutam Vora  |  Ahmedabad 

In stark contrast to the Ministry of Shipping's proposal to bring all non-major ports under a single central regulatory framework, Gujarat is taking the initiative amongst its peers in bringing port-led development to the state.

Impressed by this Western state’s success story in ports, many coastal states have also started looking to Gujarat to help them chalk-out a road map for port-led growth.

For instance, coastal states including Orissa, Kerala and Karnataka have initiated talks with the Gujarat government to formulate a maritime authority for their respective states.

Officials at the Gujarat Maritime Board (GMB), the state maritime authority, have reported that senior officials from other state governments have already started visiting Gujarat. "Officials from Orissa, Kerala and Karnataka have visited Gujarat and seen the port development here. They are excited about the growth and have sought our assistance to formulate maritime authorities in their respective states,” says Capt S C Mathur, chief nautical officer, GMB. “Most likely, Orissa may replicate the model of Gujarat Maritime Board in its entirety," he adds.

Gujarat was the first Indian state to have a dedicated maritime authority in 1981 and a port policy formulated in 1995. Besides Gujarat, only two other states Maharashtra and Tamil Nadu have maritime boards. The central government has directed all the maritime states to set up a maritime board on an urgent basis.

More than the maritime authority, it was a port policy that opened the doors for a port-led development in Gujarat. The port policy calls for public-private partnership (PPP) in port development and management. Unlike the Tariff Authority for Major Ports (TAMP) that determines tariffs for the major ports in the country, Gujarat's port policy safeguards the interests of port operators and the state exchequer as well.

According to government officials, the policy enabled private partnership and tariff freedom that led to port-led development in the state. "We have adopted BOOT (Build Own Operate Transfer) policy for development of greenfield ports with tariff and operational freedom to the private port operator. The legal regulation remains the subject of GMB for such ports. The port facilities come back to GMB after the completion of the BOOT period," said Mathur.

Tariff freedom has attracted large private investors to Gujarat’s ports. "The tariff mechanism, which is there for the major ports in India, does not seem to be conducive, nor is it giving any incentive to the private port operator. Rather, a public-private partnership model with tariff freedom seems more attractive. In Gujarat, we were the first to develop a port under PPP model," said Prakash Tulsiani, managing director, APM Terminals Pipavav.

As a part of the A P Moller-Maersk Group, APM Terminals operates an all weather multi-commodity port at Pipavav. with a capacity up to 5 MTPA for bulk cargo, 2 million tonnes per annnum (MTPA) for liquid cargo and 1.3 million TEU (twenty-foot equivalent units) for container cargos.

Gujarat currently has four greenfield private sector ports operational with a combined installed capacity of all four at around 100 MTPA. These private sector ports include Mundra Port, Hazira Port, Pipavav Port and Dahej Port. The commodities handled at these ports include coal, fertilisers, agri-commodities, salt, LNG and LPG besides others.

The industry insiders feel that the Gujarat's business-friendly policy and governance attracts industries to make investments in the port sector. "Almost all of our investments of Rs 6,000 crores currently in ports are in the state of Gujarat located at Vadinar and Hazira. Further, we would be investing another Rs 2,000 crores in Gujarat to add 40 MTPA of capacity as a part of our total planned investment of Rs 9,300 crore to take our capacity to 158 MTPA by 2013," said Rajiv Agarwal, MD, Essar Ports Limited.

Essar group currently operates a combined capacity of 88 MTPA at the two locations, while the upcoming is at Salaya on the west coast near Jamnagar. However, the company is also adding 30 MTPA of capacity at Paradip in the eastern state of Orissa at a cost of around Rs 1,100 crore.

The port development in the state has also provided a boost to export-oriented industries coming up in Gujarat. India's largest car maker by sales, Maruti Suzuki India Limited is reported to be planning a plant in Gujarat with an estimated investment of Rs 4000 crore. The industry insiders believe that a plant in Gujarat would help Maruti to export its car easily in the overseas markets.

The special economic zones (SEZs) coming up in Gujarat are also promising assured business for the port operators in Gujarat. "From the operations point of view, Gujarat is very well connected to the hinterland and gives access to land-locked northern India. Also, the longest coast-line and development of SEZs, investment regions and industrial clusters makes the state a key location for maritime trade," says Tulsiani.

The existing installed capacity of the 41 non-major ports in Gujarat stands at 273 MTPA, which is expected to rise to 508 MTPA by 2014-15. So far, the cargo handling at these non-major ports was recorded at 231 MTPA for 2010-11 up 12.34 per cent over previous year.

Cargo handling at the non-major ports in Gujarat has grown by a compounded annual growth rate (CAGR) of 12.2 per cent in the last decade easily outstripping the national CAGR of 9.3 per cent (from 368 MTPA in 2000-01 to 821 MTPA in 2010-11.)

India's 7500 kms long coastline covers states including Gujarat, Maharashtra, Goa, Andhra Pradesh, Tamil Nadu, Karnataka, Kerala and West Bengal with 12 major ports and close to 200 non-major ports, all of which could be ardent emulators of Gujarat’s successful ports gameplan.

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First Published: Thu, July 14 2011. 00:08 IST