Coming JNPT terminal may help deal with overcapacity

But rival bidders question the undue haste with which the Rs 8,000-cr project was awarded to Singapore's PSA

Adani Group-promoted Mundra Port and neighbour Pipavav might have enjoyed the spillover from the Jawaharlal Nehru Port Trust (JNPT), India’s largest container port, in the past few years. But, with the commissioning of the fourth container terminal at JNPT, dynamics are set to change.

Expected to be functional by 2018, the terminal will double JNPT’s capacity by adding 4.8 million TEUs (twenty equivalent foot units) and add 43 per cent to the capacity on the west coast. Later this month, Singapore’s PSA International, is expected to sign the concession pact with JNPT.

“The competition won’t be happy with so much additional capacity,” said L Radhakrishnan, ex-chairman of JNPT. But, Prakash Tulsiani, managing director, Gujarat Pipavav Port, said there were enough volumes for all ports in their respective command areas with little overlapping.

The shipping ministry had rushed to award the Rs 8,000-crore project to PSA for its winning bid of 35.7 per cent royalty share in February, brushing with the model code of conduct deadline. N N Kumar, chairman, JNPT, said, “Container trade is growing annually at eight-nine per cent. With this, we will get back our hinterland cargo.”

Other than PSA, Adani Group was the only company to bid at 27 per cent revenue share. Others backed off for reasons including the inadvertent rush to award the project and a lack of clarity on the details of implementation.

The award of the project to PSA, which had won the bid in the last round only to bow out at the last moment, has raised questions among bidders. The company had rebid. An official of a port company said, “PSA should have been disqualified for not living up to its commitment. The rush to award it to PSA is highly suspicious.”

The project, with a long litigation history, could see a legal battle if a bidder decides to go to court. “After elections, the picture could change for the future of this project.”

Among the companies that did not put in a final bid were DP World, Sterlite Ports, APM Terminals, United Liner Agencies and International Container Terminal.

JNPT has not added any capacity since 2006. Last year, the port awarded the 330-metre quay length container terminal to the Dubai Port World. Since 2008, the cargo handled by the port has remained 4.1 million TEUs due to capacity constraints, while Mundra and Pipavav have been seeing a growth of 20 per cent year-on-year.

A study by Barclays India Infrastructure said: “Mundra has attained a scale at which the impact on base traffic would not be very high but that impact on Pipavav could be higher given that it still primarily serves as a second port of call of JNPT.” A questionnaire to Adani Group, which operates the Mundra terminal, remained unanswered. But Tulsiani said over time APM Terminals Pipavav has established its own command area. "Today APM Terminals Pipavav offers the most cost-effective and efficient solutions to the containerised trade based in north and north-west in relation to Nhava Sheva (JNPT).

It is on an average over 200 km closer to the large cargo generating areas near the National Capital Region and farther north to Ludhiana than JNPT.

Tulsiani said the double stack capabilities on rail save costs and double the carrying capacity. "30 per cent of our rail throughput is double stacked and steadily increasing. APM Terminals Pipavav today handles on average eight trains a day, with a capacity to handle 22 trains a day — the latent rail capacity at Pipavav is unmatched by any other port on the west coast." With the commencement of the dedicated rail corridor, APM Terminals Pipavav will continue to retain its advantage of distance and the volume support will come from the 24 industrial nodes planned along its alignment. The west coast services approximately 70 per cent of India’s containerized trade of over 10 Million TEUs. JNPT services close to 55-60 per cent of that volume while ports in Gujarat service the remaining 40-45 per cent. With the economic climate looking up and trade volumes starting to pick up, Tulsiani said ports were looking to crest the next surge in volumes.

APM Terminals Pipavav, on its part, plans for to expand capacity from 0.85 million TEU to 1.35 Million TEU within the next two years.
TROUBLES SAILING AWAY?

• Mundra Port and Pipavav may have enjoyed the spillover from the JNPT in the past few years
• But, with the commissioning of the fourth container terminal at JNPT, dynamics are set to change