VPT BOT operators demand policy reforms from the Ministry of Marine for efficient use of port infrastructure
New Delhi, Sep 28 (SocialNews.XYZ) Visakhapatnam Port Trust (VPT) BOT operators have demanded immediate reforms in the port sector from Minister of Navigation Shri Sarbananda Sonowal for efficient use of port infrastructure. Without appropriate policy reforms, these BOT operators will not be part of VPT’s growth trajectory by effectively using port infrastructure and are poised to become non-performing assets.
Visakhapatnam Port Trust (VPT), ââthree concession agreements, namely Adani Steam Coal Handling Terminal with 6.5 MTPA capacity, SEW Steam Coal Handling Facility of a capacity of 7.5 MTPA and the Alba cargo handling facility with a capacity of 6 MTPA from Alba with a total investment of approx. Rs 2,500 crore has been stranded due to lack of supportive policies from the Department of Transportation and Transportation. In addition, six dealers are also in trouble due to various constraints in the dealership contract, forcing them to fight with VPT through dispute / arbitration on various issues.
VPT is currently experiencing weak performance with a compound annual growth rate (CAGR) of 0.7%, while Gangavaram Port Limited (GPL) in Visakhapatnam is growing with a CAGR of 10.5%. This is mainly due to the fact that GPL is not governed by TAMP (Tariff Authority for Major Ports) regulations and adopts aggressive marketing strategies, faster turnaround times, competitive prices, offering attractive discounts to users. and restricted the management of the merchant’s vessel to become monopolistic.
In VPT, PPP projects like Essar Vizag Terminal Limited, Vizag Seaport Private Limited and Vizag General Cargo Berth Private Limited, etc. have been affected by the aggressive pricing of LPG. Viskha Container Terminal Private Limited has started to fear that some of its volume will be diverted to the LPG container terminal which is under construction and plans to start operations in the first quarter of next fiscal year. GPL being a private port and not regulated by the Ministry of Maritime Transport, it makes strategic decisions and ensures immediate implementation for the growth of the company, while VPT reads the “regulation” as mentioned in the agreement of concession and did not find an immediate solution to the problem, which highlighted the migration of cargoes. to LPG and a sharp increase in LPG volumes over the past 10 years.
Over the past decade, the Indian government has invited private investment in the major port sector and several projects have been awarded under Design, Build, Finance, Operate and Transfer (DBFOT) in the main ports of the country. India currently has 36 no. public-private partnership (PPP) projects with a capacity of 358 MTPA which are operational in major ports in India. The country also has 16 no. PPP projects with a capacity of 131 MTPA at various stages of implementation.
Recognizing the importance of the shipping industry in sustaining the growth of trade and commerce in the country, the Ministry of Ports, Navigation and Waterways (MoPSW) formulated The Maritime India Vision 2030 to revamp the Indian maritime sector. It provides 40 no. greenfield / brownfield public-private partnership (PPP) projects for the offer to investors.
However, there is a need for the ongoing disputes between the concessionaire and the licensing authority, which number nearly 55, to be immediately resolved through changes in port policies.
The structure of PPPs in large ports is such that the traffic risk for the project is borne by the concessionaire, while the licensing authority secures its revenues through a guaranteed minimum freight mechanism. It is therefore extremely difficult for the dealer to manage the risks. Despite due diligence and prudence when conceptualizing these projects from various angles, the survival of some of the projects is threatened for various reasons which are not foreseen or which are beyond the control of the collaborating partners, i.e. Dealer. and the Licensing Authority. Some of the main reasons for this may be aggressive auctions and optimistic projections for volumes and loads, unforeseen dynamic changes in business, and the lack of flexibility to overcome these dynamic changes in concession agreements. .
The situation deteriorated further due to various policy reforms, which severely affected activity and uncertainty about future processing volumes. This could jeopardize the viability of the project, which did not consider the possibility of fundamental changes in government policy at the planning and tender stage, rendering the terminals completely unused and severely affecting the revenue share of the concessionaire’s licensing authority.