Port Sector - Privatization Initiatives and implementation 1.

Introduction Ports and shipping has traditionally been the engines of growth for any country. India cannot afford to neglect these sectors in the present scenario of Globalization and Liberalization, where increased trade is happening across borders. In order to put the nation on an impressive growth path, huge investments in ports, ship building, etc. are the need of the hour. Gujarat with its 1600 km coast line stands to benefit immensely by creating a world class port infrastructure capable of catering to not only the industry in the state but also to the hinterlands in the neighbouring states. Due to the proximity to GCC Countries and Middle East, Gujarat ports can act as gateways to import POL products from these regions to produce value-added goods. Various investment opportunities are depicted in figure. Gujarat is the most important state amongst 9 coastal states of India. The State of Gujarat has got a naturally gifted very long coastline in comparison with the other coastal states. Gujarat has 1600 Kms long coastline, which is about 1/3rd of the total Indian coastline, and have a 43 ports. Amongst these, Kandla is a Major port and is administrated by Kandla Port Trust (an autonomous body) on behalf of central government and Diu and Daman are two minor ports under central government. Remaining 40 ports located on the state coastline are under State Government. The Government of India has adopted a liberalization policy since last decade. The main aim of the liberalization is to develop major sectors of India with the help of private investment. The port sector is one of the sectors amongst others, which is selected to develop in private sectors. The state government has also adopted the policy of liberalization. 2. Gujarat's Minor Ports Considering current globalization as well as liberalization and looking to the importance of increasing Indian business and Gujarat industrial development, it is expected that the import and export business will increase in big way, in the future. In view of rapid industrialization, rising international trade of north Indian states, requirements of roads and rail infrastructure and other such aspects, the state government declared an integrated Port Policy in December 1995. 3. Success story of port development Port Sector – Public Private Partnership Model Driving factors for PPP: Globalization and Liberalization policy in 1991 New EXIM policy demands international standard port infrastructure for foreign trade Shortages of existing port capacity Changes in ship size and introduction of specialized ships Needs to upgrade port operation efficiency Growth of Containerization and specialized cargo terminals Congestions in neighborhood major ports Huge and heavy investments Stagnancy in expansion of existing port infrastructure



sector port (BOOT) Private Jetties (BOT) 1. This jetties are allowed to use till the industry continued by the respective companies. Develop & Maintain by Port base industries Concession in port charges Operational freedom The current captive jetty policy allows 80% set-off on wharfage against the capital cost including interest during construction period. As per this model.Essar-L&TGACL) Pipavav (L&T-NCCL) Incentives: -2- . port based industries created port facilities to import their industrial raw material and to export finished products.Gujarat Maritime Board is having multiple port models in its jurisdictions like Private/Joint Sector Ports.43 MMT The proportion of captive jetty traffic in total traffic of GMB is 70 % in the year 2005-06. Captive Jetties Framework: • • • • • • • In 1993. First captive jetty of M/s. Captive Jetties Locations: Koteswar(Sanghi) Sikka (Reli -DCC) Muldwarka (GACL) Dahej (Indo Gulf. Models of PPP Captive Jetties (BOMT) Private/Jt. Captive Jetties Model: To encourage the port based industries. Private Jetties. Digvijay Cement operation since 1978 and total cargo handled by all captive jetties during the year 2005-06 from captive jetties is 74. private companies have been granted permission to construct captive jetties. the nomenclature “captive jetty” was formally introduced along with policy guidelines. IPCL) Hazira – (Reli. Captive Port Terminals and GMB ports/GMB jetties.

A total 19 captive jetties are operational at Gujarat coast. M/s. M/s. Essar Steel Ltd. Reliance Industries Ltd. M/s. (old jetty) M/s. Total 19 captive jetties are operational at various ports 3. M/s. M/s. Ltd. M/s. Reliance Ports & Terminal Ltd. M/s. M/s. The world largest grass root refinery has been established at Sikka port in the State of Gujarat 4. Has been realized 5. M/s. Gujarat Ambuja Cement Company Ltd. Reliance Ports & Terminal Ltd. Essar LPG jetty M/s. Location Muldwarka Muldwarka Sikka Sikka Sikka Sikka Sikka Hazira Hazira Hazira Hazira Hazira Hazira Hazira Hazira Kovaya Dahej Dahej Jakhau Commencement Year Sep-93 Jul-97 May-87 1973 Jul-99 Jul-97 Sep-99 Mar-91 Dec-95 Oct-95 Jul-93 Sep-93 May-97 Nov-96 Jan-99 May-2002 -3- . 4300 cr. Total Investment Rs. Indian Petrochemicals Corporation Ltd. Larsen & Toubro Ltd. Ultra Tech Cement Ltd. 2. Gujarat Ambuja Cement Company Ltd. M/s. Sanghi Ind. M/s. M/s. List of the Captive jetty operational at GMB ports Sr. Reliance Industries Ltd. Reliance Ports & Terminal Ltd. Reliance Industries Ltd. GMB has facilitated Industries to develop their own captive port facilities to import their raw materials and export finish products. Gujarat Ambuja Cement Company Ltd. M/s.Nature of Incentives Project Structure Port Charges Operational freedom Lenders protection Lease Period Future expansion BOMT Concession Full Yes +25 years Yes Achievements: 1. Dahej Harbour Infrastructe Ltd. These captive jetties handle about 70 % of the total cargo handle at GMB ports. No. (new jetty) Gujarat State Fertilizer Corporation Shree Digvijay Cement Company Ltd. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Name of the Company M/s. M/s. Reliance Industries Ltd.

the investor-friendly port policy was introduced • Ten Greenfield port sites were identified for development through private participation. • There was global tendering to ensure transparency and competence of port developers.2. New Greenfield ports through Private Investments (BOOT model): The Gujarat Maritime Board identified 10 Greenfield sites to develop all weather direct berthing ports. These projects are being developed under BOOT policy (Build Own Operate Transfer). These new ports will be transferred back to GMB after completion of 30 years BOOT period. The GID Act. These projects require a huge investment.GID Act Global competitive bidding Transparent selection procedure of developer Scope of State participation for initial stage development or strategic partner Bankable project document – Model Concession Agreement Scope for sub concession for development of specialized port facilities Scope for development of add on projects Locations of ports: Mundr Positr Private Sector Joint Sector Bed Dholer MithiVird Pipava Sima Dahe Hajir Vansi Marol -4- . 1999 was implemented to ensure balanced development of major infrastructure projects. The BOOT policy was announced in 1997. • • Policies: Port Policy – 1995 Integrated port development vision with private public participation Synchronization of small and large investors in port sector Creation of market driven port sector BOOT Policy –1997 Minimum role of State in development Maximum operational flexibility with tariff freedom Maximum concession Lowest water front royalty – single levy of state government No business development restriction Adequate compensation on project transfer The GIDB Act 1999 Single window framework for infrastructure project . Private & Joint Sector Ports • In 1995.

GMB disinvested from the project and it has been decided to develop in private sector on BOOT basis. -5- . Gujarat Pipavav Port Ltd. Broad-gauge rail conversion of 270 km.Incentives: Nature of Incentive Project Structure Project feasibility study Project Land acquisition Tariff setting freedom Operational freedom Lenders protection Concession Period Sub concession/contract Future development rights BOOT Ready Govt. 697 crores is realized. GPPL has taken up expansion plant of the port and various development works are under progress. A jetty of 725 mt. (GPPL) in which. Mearsk. Concession Agreement was executed on 30/09/98 with the company. Port Pipavav is the first in India to receive double-stacked container trains. from Surendranagar to Pipavav has been commissioned in May 2003. of Gujarat Full Full Yes 30 years + 20 years on mutual agreed terms Yes Yes Success story of port development PIPAVAV PORT Initially. to develop Pipavav port with 30 years BOOT period. Later in 1998. long for handling liquid POL cargo was developed. Total Private Investment of Rs. The port is operational since 1996. Broad-gauge rail connectivity provided by forming Separate Special Purpose Vehicle company (SPV) with Railway Ministry (GoI) partnership. which have a capacity of carrying 180 TEUs as against 90 TEUs carried in a single stack train. development of port has been taken up in joint sector by the joint sector company M/s. 26 % of shares were with Gujarat Maritime Board. the international shipping line has made their base at the Port of Pipavav. long for handling solid bulk and a jetty of 305 mt.

136 crores. Ships up to 80000 DWT can berth at the jetty. The port has been operational since.2151 crores. conveyor system having 18000 M. 1374 crores is realized. The company has established broad gauge rail link of 57 km. A Concession Agreement for development of the port on BOOT basis was signed between Government of Gujarat/ Gujarat Maritime Board and GAPL in February 2001. Tones Per day capacity have been installed at the jetty. which has brought foreign investment of Rs. For handling of cargo. The construction of remaining portion of container berth is under final stage of construction The company has completed construction of T-2 bulk cargo terminal at the port and it will be operational soon. (GAPL) is developing the Mundra port. 2003.MUNDRA PORT M/s. The total port project would be developed at an investment of @ Rs. 1998.an international container terminal operator. Company has constructed 4 multipurpose berths and commenced cargo operation from September 1998.1400 crores in terminal development. The company has set up 1 SPM for import of crude oil. with the port and commissioned in 2002. For operation and development of container terminal the company has associated in May 2003 with P & O . at an investment of Rs. In Phase-I development container berth of 632 m long berth is completed and put into operation since July. The port has also facilities of double stacked container rail. -6- . Gujarat Adani Port Ltd. Total Private Investment of Rs.

-7- ..50 % equity in the company. A joint sector company M/s. The company has made an investment of Rs. LNG terminal have been operational since February 2004. Petronet LNG Ltd. PETRONET LNG LTD. The company has undertaken expansion of LNG storage facilities at the port The company has also planned to built additional LNG berth at Dahej port for which MOU has been signed in Vibrant Gujarat 2007.DAHEJ PORT (a) 1. The terminal has a capacity of 5 MMTPA LNG handling. 2800 crores. All PSUs holding 12. The project have been envisaged an investment of Rs.3130 crores. have been formed by Oil sector PSU's of Government of India for development of the port.

(b) CHEMICAL TERMINAL (GCPTCL) A joint sector company M/s. can For development of the terminal an investment of Rs. of Gujarat and Government of India for the terminal development. GMB has put up 17. Gujarat Chemical Port Terminal Co. Annual Capacity to handle chemicals of the terminal is about 1. have been formed by PSU's of Govt.80 million metric tones. Besides liquid chemical storage facilities..906 crores has been made. the port facility developed accommodate of ships having size 6000 to 60000 DWT at the berth. -8- . Ltd.50 % equity in the company. The Chemical Port Terminal has been commissioned since January 2001.

reclamation and LNG berth etc. Recently. they will implement the project. POSHITRA A joint sector company namely Gujarat Poshitra Port Co. a company promoted by an international company M/s. 2408 crores is made for the development of Hazira port. HPPL has signed Heads of Agreement with PSA International for the development of container terminal at Hazira. On development of phase-1. LNG. the company has obtained Environment Clearance for the project and now. turning area and berth pocket. the port would be able to handle about 16.. (a group of companies of JK white cement). which is on BOOT basis. Southern and Northern spur. Shell Gas B. The company has completed construction of port assets viz. -9- . Total investment of Rs. The Port Project evolving development of LNG and other cargo facilities at an investment of Rs. Dholera Port Ltd.V. The project is awaiting Environment Clearances. Ltd. capital dredging of approach channel. M/s. Hazira port is being developed fully in private sector. Company has prepared a Detailed Project Report for development of Dholera Port which is approved by GMB. Hazira Port Pvt. The company has signed concession agreement on April 2002 with GMB/GoG. DHOLERA GMB has issued LoI to M/s. has been formed to develop Poshitra port. Ltd. 3792 crores. for the development of Hazira Port. general dry bulk and container. The LNG terminal and Port Project was unveiled by Hon’ble Chief Minister of Gujarat in the presence of Union Petroleum Minister and others on 19/9/2003.HAZIRA As per the Port policy.50 MMTPA of various types cargoes viz.

After evaluating the RFQ. After evaluating the RFQ. The bid is under examination. All interested companies have been provided Request for Qualification document. All interested companies have been provided Request for Qualification document. All interested companies have been provided Request for Qualification document. the short listed companies will be invited for Request for Proposals (RFP).MAROLI GMB has received bid for Maroli port development. the short listed companies will be invited for Request for Proposals (RFP). VANSIBORSI GMB has invited Expression of Interest for the development of Vansiborsi port. All interested companies have been provided Request for Qualification document. SIMAR GMB has invited Expression of Interest for the development of Simar port. -10- . After evaluating the RFQ. the short listed companies will be invited for Request for Proposals (RFP). BEDI GMB has invited Expression of Interest for the development of Bedi port. the short listed companies will be invited for Request for Proposals (RFP). After evaluating the RFQ. MITHIVIRDI GMB has invited Expression of Interest for the development of Mithivirdi port.

Goodearth Maritime Ltd. ports\Misc\Details for GMB website. Shakti Clearing Agency Pvt.07. GMB also privatized existing GMB port jetties 5 to 25 years lease agreement Strengthening & mechanized existing GMB jetty Cargo Guarantee Operational freedom Concessional wharfage Commercial cargo allowed Incentives: Nature of Incentives Project Structure Port Charges Operational freedom Concession Period Achievements: 1. existing port facilities have been offered to private companies to develop through private investment. Jaydeep Associates Ltd. Rozi port 100 M wharf at Rozi pier. Shantilal Multiport Infrastructure Ltd. Bedi 90 m wharf at Nayabundar. Bedi 101 M Jetty at Navlakhi 150 M wharf at Porbandar 90 M jetty at Jakhau 60 M wharf at Mundra 76. Bedi 50 M RCC jetty at Rozi Pier.2000 December 2002 January 2003 January 2004 BOT Concession Full +25 years F:\Pvt. Ashapura Minechem Ltd.2000 23.doc -11- . 6 millions tonnes of cargo handled during the year 2005-06 List of Private Jetties Operational at GMB ports Sr.07. United Shippers Ltd. Ruchi Infrastructure Ltd. 2.06. These private jetties are granted permission for a lease period varying from 5 to 25 years.06.02.1998 29. Ltd. Saurashtra Cement Ltd.11. Private Jetties Frame works • • • • • • • As per the Port Policy 1995. 3.5 M wharf at Navlakhi Name of company JM Baxi & Co.1999 16. 210 crores have been realized. Nine Private jetties developed Private investments of Rs. The aim of allotment of such private jetties is to handle cargo through mechanized handling system and to increase efficiency.1998 19. Private Jetties Model: As a part of short term development. 1 2 3 4 5 6 7 8 9 Private Jetty Location 100 M Jetty at Rozi pier. Operational since 14.3.2000 07.

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