The Prime Minister's Office (PMO) has convened a meeting today to discuss the allotment of land and water front at major ports to oil sector public undertakings. The meeting will be attended by officials of the ministry of petroleum and natural gas, including petroleum secretary T S Vijayaraghvan, chairmen and managing directors of oil PSUs, and senior officials of the Oil Coordination Committee (OCC).
At present, oil companies have opted for creation of dedicated berths only in the state sector.
For instance, in Vadinar, only Indian Oil Corporation (IOC) is operating the dedicated berth. A major problem associated with creation of such facilities within the port trusts is finding resources.
Most companies are not ready to absorb such projects directly on to their balance sheets, nor are they prepared to provide guarantees for the debt finance, mostly term loans raised for the projects. Accordingly, projects are being created through special purpose vehicles entirely for the purpose of operating oil and gas handling facilities at the ports, including laying of pipelines.
Besides, the surface transport ministry is also unable to provide mortgage on the water front areas and jetties to be constructed within the port trusts, since under existing regulations no mortgage is allowed on sovereign land.
On the other hand, state governments are willing to provide mortgage on the land. Gujarat has already provided physical asset cover for raising the debt finance raised for such projects. Among the facilities being sought by oil firms at ports is deep-water dredging for creation of dedicated terminals for oil.
This is to facilitate the docking of large vessels of over 140,000 dead weight tonnes. Currently, such vessels dock outside the ports and are transshipped to ports through smaller vessels. This adds to the transportation costs.
