privatisation mundra port

8/6/2019 Privatisation Mundra Port

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Port Sector - P rivatization I nitiatives and implementation

1. Introduction

Ports and shipping has traditionally been the engines of growth for any country. India cannotafford to neglect these sectors in the present scenario of Globalization and Liberalization, whereincreased trade is happening across borders. In order to put the nation on an impressive growthpath, 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 portinfrastructure capable of catering to not only the industry in the state but also to the hinterlands inthe neighbouring states. Due to the proximity to GCC Countries and Middle East, Gujarat ports canact 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 hasgot a naturally gifted very long coastline in comparison with the other coastal states. Gujarat has1600 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 autonomousbody) 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 theliberalization is to develop major sectors of India with the help of private investment. The portsector is one of the sectors amongst others, which is selected to develop in private sectors. Thestate government has also adopted the policy of liberalization.

2. Gujarat's Minor P orts

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 andexport business will increase in big way, in the future. In view of rapid industrialization, risinginternational trade of north Indian states, requirements of roads and rail infrastructure and othersuch 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

Introduction:



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Gujarat Maritime Board is having multiple port models in its jurisdictions like Private/Joint SectorPorts, Private Jetties, Captive Port Terminals and GMB ports/GMB jetties.

1. Captive Jetties Model:

To encourage the port based industries, private companies have been granted permission toconstruct captive jetties. As per this model, port based industries created port facilities to

import their industrial raw material and to export finished products. This jetties are allowed touse till the industry continued by the respective companies.

Captive Jetties Framework:

• In 1993, the nomenclature “captive jetty” was formally introduced along with policyguidelines.

• 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.• First captive jetty of M/s. Digvijay Cement operation since 1978 and total cargo handled

by all captive jetties during the year 2005-06 from captive jetties is 74.43 MMT

• The proportion of captive jetty traffic in total traffic of GMB is 70 % in the year 2005-06.

Captive Jetties Locations:

Incentives:

Private Jetties

(BOT) Priva te/ Jt. sec tor po rt

(BOOT)

Cap tive Jetties

(BOMT)

Models of PPP

Koteswar(Sanghi)

Sikka (Reli -DCC)

Muldwarka(GACL)

Pipavav

(L&T-NCCL)

Dahej (Indo

Gulf IPCL

Hazira –

(Reli- Essar-L&T-

GACL



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Nature of I ncentives

Project Structure BOMT

Port Charges Concession

Operational freedom Full

Lenders protection Yes

Lease Period +25 years

Future expansion Yes

Achievements:1. GMB has facilitated Industries to develop their own captive port facilities to import their

raw materials and export finish products. A total 19 captive jetties are operational atGujarat coast.

2. Total 19 captive jetties are operational at various ports3. The world largest grass root refinery has been established at Sikka port in the State of

Gujarat4. Total Investment Rs. 4300 cr. Has been realized5. These captive jetties handle about 70 % of the total cargo handle at GMB ports.

L i st o f t he Cap t i ve j e t t y ope ra t i ona l a t G MB po r t s

Sr .No.

Name o f t he Comp any Loca t ion Comm encement Year

1 M/s. Gujarat Ambuja Cement Company Ltd.(old jetty)

Muldwarka Sep-93

2 M/s. Gujarat Ambuja Cement Company Ltd.(new jetty)

Muldwarka Jul-97

3 Gujarat State Fertilizer Corporation Sikka May-87

4 Shree Digvijay Cement Company Ltd. Sikka 1973

5 M/s. Reliance Ports & Terminal Ltd. Sikka Jul-99

6 M/s. Reliance Ports & Terminal Ltd. Sikka Jul-97

7 M/s. Reliance Ports & Terminal Ltd. Sikka Sep-99

8 M/s. Reliance Industries Ltd. Hazira



Mar-91

11 M/s. Reliance Industries Ltd. Hazira Dec-95

12 M/s. Essar Steel Ltd. Hazira Oct-95

13 M/s. Essar LPG jetty Hazira -

14 M/s. Gujarat Ambuja Cement Company Ltd. Hazira Jul-93

15 M/s. Larsen & Toubro Ltd. Hazira Sep-93

16 M/s. Ultra Tech Cement Ltd. Kovaya May-97

17 M/s. Indian Petrochemicals Corporation Ltd. Dahej Nov-96

18 M/s. Dahej Harbour Infrastructe Ltd. Dahej Jan-99

19 M/s. Sanghi Ind. Ltd. Jakhau May-2002



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2. New Greenfield ports through Private Investments (BOOT model):

The Gujarat Maritime Board identified 10 Greenfield sites to develop all weather directberthing ports. These projects are being developed under BOOT policy (Build Own OperateTransfer). These projects require a huge investment. These new ports will be transferred backto GMB after completion of 30 years BOOT period.

Private & Joint Sector Ports

• In 1995, 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.• The BOOT policy was announced in 1997.• The GID Act, 1999 was implemented to ensure balanced development of major

infrastructure projects.

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 - 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:

Private Sec tor

Joint Sec tor

Dahe

Mundr

Positr

VansiSima

MithiVird

Bed

Marol

Ha ir

Dholer

Pi ava



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Incentives:

Nature of I ncentive

Project Structure BOOT

Project feasibility study Ready

Project Land acquisition Govt. of Gujarat

Tariff setting freedom Full


Lenders protection Yes

Concession Period 30 years + 20 years on mutual agreedterms

Sub concession/contract Yes

Future development rights Yes

Success story of port development

PIP AVAV PORT Initially, development of port has been taken up in joint sector by the joint sector

company M/s. Gujarat Pipavav Port Ltd. (GPPL) in which, 26 % of shares were withGujarat Maritime Board. Later in 1998, GMB disinvested from the project and it has beendecided to develop in private sector on BOOT basis.

Concession Agreement was executed on 30/09/98 with the company, to develop Pipavavport with 30 years BOOT period.

The port is operational since 1996.

A jetty of 725 mt. long for handling solid bulk and a jetty of 305 mt. long for handlingliquid POL cargo was developed.

Mearsk, the international shipping line has made their base at the Port of Pipavav.

Broad-gauge rail connectivity provided by forming Separate Special Purpose Vehiclecompany (SPV) with Railway Ministry (GoI) partnership. Broad-gauge rail conversion of 270 km. from Surendranagar to Pipavav has been commissioned in May 2003.

Port Pipavav is the first in India to receive double-stacked container trains, which have acapacity of carrying 180 TEUs as against 90 TEUs carried in a single stack train.

Total Private Investment of Rs. 697 crores is realized.

GPPL has taken up expansion plant of the port and various development works are underprogress.



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MUNDRA PORT

M/s. Gujarat Adani Port Ltd. (GAPL) is developing the Mundra port. 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.

Company has constructed 4 multipurpose berths and commenced cargo operation fromSeptember 1998. Ships up to 80000 DWT can berth at the jetty.

For handling of cargo, conveyor system having 18000 M. Tones Per day capacity havebeen installed at the jetty.

The port has been operational since, 1998. The company has established broad gauge rail link of 57 km. at an investment of Rs.136

crores, with the port and commissioned in 2002. The port has also facilities of doublestacked container rail.

In Phase-I development container berth of 632 m long berth is completed and put intooperation since July, 2003. The construction of remaining portion of container berth isunder final stage of construction

The company has completed construction of T-2 bulk cargo terminal at the port and it willbe operational soon.

For operation and development of container terminal the company has associated in May2003 with P & O - an international container terminal operator, which has brought foreigninvestment of Rs.1400 crores in terminal development.

The company has set up 1 SPM for import of crude oil. The total port project would be developed at an investment of @ Rs.2151 crores. Total Private Investment of Rs. 1374 crores is realized.



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DAHEJ PORT

(a) PETRONET LNG LTD.

1. A joint sector company M/s. Petronet LNG Ltd., have been formed by Oil sector PSU's of Government of India for development of the port. All PSUs holding 12.50 % equity in thecompany.

The project have been envisaged an investment of Rs.3130 crores.

LNG terminal have been operational since February 2004. The terminal has acapacity of 5 MMTPA LNG handling.

The company has made an investment of Rs. 2800 crores.

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 forwhich MOU has been signed in Vibrant Gujarat 2007.



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(b) CHEMICAL TERMINAL (GCPTCL)

A joint sector company M/s. Gujarat Chemical Port Terminal Co. Ltd., have beenformed by PSU's of Govt. of Gujarat and Government of India for the terminaldevelopment.

GMB has put up 17.50 % equity in the company.

The Chemical Port Terminal has been commissioned since January 2001.

Annual Capacity to handle chemicals of the terminal is about 1.80 million metrictones.

Besides liquid chemical storage facilities, the port facility developed canaccommodate of ships having size 6000 to 60000 DWT at the berth.

For development of the terminal an investment of Rs.906 crores has been made.



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HAZIRA

As per the Port policy, Hazira port is being developed fully in private sector.

M/s. Hazira Port Pvt. Ltd., a company promoted by an international company M/s. ShellGas B.V. for the development of Hazira Port.

The Port Project evolving development of LNG and other cargo facilities at an investment

of Rs. 3792 crores. The company has signed concession agreement on April 2002 with GMB/GoG, which is on

BOOT basis.

On development of phase-1, the port would be able to handle about 16.50 MMTPA of various types cargoes viz. LNG, general dry bulk and container.

The company has completed construction of port assets viz. capital dredging of approachchannel, turning area and berth pocket, Southern and Northern spur, reclamation and LNGberth etc.

The LNG terminal and Port Project was unveiled by Hon’ble Chief Minister of Gujarat in thepresence of Union Petroleum Minister and others on 19/9/2003.

HPPL has signed Heads of Agreement with PSA International for the development of

container terminal at Hazira. Total investment of Rs. 2408 crores is made for the development of Hazira port.

DHOLERA

GMB has issued LoI to M/s. Dholera Port Ltd. (a group of companies of JK white cement).Company has prepared a Detailed Project Report for development of Dholera Port which isapproved by GMB. Recently, the company has obtained Environment Clearance for the project andnow, they will implement the project.

POSHITRA

A joint sector company namely Gujarat Poshitra Port Co. Ltd. has been formed to develop Poshitraport. The project is awaiting Environment Clearances.



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MAROLI

GMB has received bid for Maroli port development. The bid is under examination.

BEDI

GMB has invited Expression of Interest for the development of Bedi port. All interested companieshave been provided Request for Qualification document. After evaluating the RFQ, the short listedcompanies will be invited for Request for Proposals (RFP).

SIMAR

GMB has invited Expression of Interest for the development of Simar port. All interestedcompanies have been provided Request for Qualification document. After evaluating the RFQ, theshort listed companies will be invited for Request for Proposals (RFP).

VANSIBORSI

GMB has invited Expression of Interest for the development of Vansiborsi port. All interestedcompanies have been provided Request for Qualification document. After evaluating the RFQ, the

short listed companies will be invited for Request for Proposals (RFP).

MITHIVIRDI

GMB has invited Expression of Interest for the development of Mithivirdi port. All interestedcompanies have been provided Request for Qualification document. After evaluating the RFQ, theshort listed companies will be invited for Request for Proposals (RFP).



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3. Private Jetties Model:

As a part of short term development, existing port facilities have been offered to privatecompanies to develop through private investment. The aim of allotment of such private jetties isto handle cargo through mechanized handling system and to increase efficiency. These private jetties are granted permission for a lease period varying from 5 to 25 years.

Private Jetties Frame works

• As per the Port Policy 1995, 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 I ncentives

Project Structure BOT

Port Charges Concession


Concession Period +25 years

Achievements:

1. Nine Private jetties developed2. Private investments of Rs. 210 crores have been realized.3. 6 millions tonnes of cargo handled during the year 2005-06

List of P rivate Jetties Operational at GMB ports

Sr. Private Jetty Location Name of company Operationalsince

1 100 M Jetty at Rozi pier, Bedi JM Baxi & Co. 14.07.1998

2 90 m wharf at Nayabundar, Roziport

Shakti Clearing AgencyPvt. Ltd.

29.07.1998

3 100 M wharf at Rozi pier, Bedi Ruchi Infrastructure Ltd. 19.06.1999

4 50 M RCC jetty at Rozi Pier, Bedi Shantilal MultiportInfrastructure Ltd.

16.06.2000

5 101 M Jetty at Navlakhi United Shippers Ltd. 23.02.2000

6 150 M wharf at Porbandar Saurashtra Cement Ltd. 07.11.2000

7 90 M jetty at Jakhau Goodearth Maritime Ltd. December 2002

8 60 M wharf at Mundra Ashapura Minechem Ltd. January 2003

9 76.5 M wharf at Navlakhi Jaydeep Associates Ltd. January 2004

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