INDIAN PRIVATE PORTS AND TERMINALS ASSOCIATION (IPPTA)

NAVIC meeting chaired by Chairman, Chennai Port Authority on 4 Sept 2024

PSA’s Bharat Mumbai Container Terminals (PSA Mumbai) joins IPPTA PSA's Bharat Mumbai Container Terminals (BMCT) has joined Indian Private Ports and Terminals Association (IPPTA) as a Member. The Managing Committee of IPPTA considered their application in its meeting held on 11 June 2024 and admitted them as a Member. BMCT is located in Jawaharlal Nehru Port Authority (JNPA) in Maharashtra, India's largest and premier container gateway. BMCT which is JNPA's fourth container terminal, caters to the ever-increasing demand for container handling capacity in the Western India region. Besides being well-connected by major highways and rail networks to key markets in Maharashtra, Gujarat, and the National Capital Region of India, PSA Mumbai is also equipped with double-stack train infrastructure to support India's Dedicated Freight Corridor that will allow trains to carry more and heavier loads at higher freight speed. IPPTA is the apex body set up in the year 2003 that represents the interests of the private ports and PPP terminals in India. IPPTA represents the views of its Members to Government, regulatory bodies, other industry associations and stakeholders. Its members include prominent national and international players who brought in substantial investments, state-of-the-art technology, and international best practices to the Indian port sector. IPPTA has been playing a prominent role in assisting the Government in the formulation and implementation of policies relating to private sector participation in port sector. IPPTA extends a hearty welcome to PSA as a Member of the Association and looks forward to achieving the objectives of IPPTA by working together. IPPTA is also requesting other private ports and port Operators to join the Association to pursue the common cause.

Mr Devki Nandan of JSW Infrastructure takes over as President of IPPTA The Management Committee of Indian Private Ports and Terminals Association (IPPTA) has been reconstituted in the 23rd AGM held at Mumbai on 08 May 2024. The following have been elected as the new office bearers of the Association: (i)               Mr Devki Nandan, Sr Executive Vice President and Head (Business Development and M&A) of JSW Infra as President (ii)             Capt Ravinder Johal, Group COO of DP World as Vice President (iii)          Mr C Sateesh Kumar, CEO of Vizag General Cargo Berth (VGCB) as Secretary (iv)           Mr Senthil Kumar Subramanian, CEO of Dakshin Bharat Gateway Terminal Pvt Ltd (DBGT) as Treasurer. In addition, Mr Sunay Mukerjee, COO of Gateway terminals of India Pvt Ltd (APM Terminals), Mr DK Nanda, Chief- CHA&IL and Commercial & Contract Management of TMILL and Capt Sudeep Banerjee, Dy COO of Visakha Container Terminal Pvt Ltd have been nominated as Executive Members on the Management Committee. Mr Devki Nandan, said “It is a privilege and honour to serve as a President of the Association. As the new India requires new age solutions, the upcoming years promise to be exciting for the Indian Port Sector, with significant investments in pipeline to incorporate cutting-edge technology, capacity building, and adopt the best international standards. We pledge our unwavering assistance to the Government in developing and implementing policies regarding private sector contribution in the port sector to achieve the goals of Maritime India Vision 2030 & Maritime Amrit Kall Vision 2047, and make India as a growth engine for the world. We as an industry, have a huge responsibility to shape the future in a meaningful and impactful manner.”  IPPTA is the apex body set up in the year 2003 that represents the interests of the private ports and PPP terminals in India. IPPTA represents the views of its Members to Government, regulatory bodies, other industry associations and stakeholders. Its members include prominent national and international players who brought in substantial investments, state-of-the-art technology, and international best practices to the Indian port sector. IPPTA has been playing a prominent role in assisting the Government in the formulation and implementation of policies relating to private sector participation in port sector.  IPPTA works with all stakeholders to identify ways in which the industry may best serve the interests of India’s fast-growing economy and to ensure that private ports and PPP Terminals play a major role in developing the country’s port and logistics policies. 

Outer Harbour Development -Tuticorin Port   Trade has hailed the proposal to develop Tuticorin Outer Harbour Container Terminal Project as it would result in substantial cost savings when main line vessels start calling the outer harbour with huge transhipment opportunities and reduction on dependence on Colombo port.   Nearly 75% of India’s Transshipment cargo is handled at ports outside India. The Ports of Colombo, Singapore, and Klang handle more than 85% of this cargo.   Colombo Port enjoys a highly critical advantage due to the following reasons:             i.           strategic position along the East-West Trade route and proximity to a large emerging economy like India.          ii.           Highly developed infrastructure with draft availability up to 18 m.        iii.           Cost competitiveness with attractive THC         iv.           strong presence of mainline and feeder operator services and value-added facilities and a vibrant maritime ecosystem.   While it is possible to attract Main Line vessels for direct trade, Tuticorin to position itself as a Transhipment hub is not easy unless the following aspects are looked into:        i.           The marine related charges at Indian major ports are very high. Unless the Port offers attractive competitive package, main line vessels may not be enthused to call on outer harbour for transhipment cargo.      ii.           Competitive Light-House dues   iii.           World -class Marine services and Terminal infrastructure with deep drafts up to 18m    iv.           Attractive tariffs for the Terminal Operators-In transhipment, double the volumes does not mean double the revenues.      v.           Special relaxation from existing MCA like no annual increase in royalties, allotment of additional land required at nominal price, concession period of 50 years etc.    vi.           Competition from nearby ports within India like Vallarpadam and Vizhingham.  vii.           Strong hinterland connectivity by road and rail viii.           Assured relaxation of cabotage regime for a long time    ix.           Availability of a strong ecosystem like workshops, reefer facilities, bonded warehousing, https://lnkd.in/g-B5UJNd

Bidding for port PPP projects on the basis of lowest VGF basis VoC Port at Tuticorin obtained the approval of the PPPAC to execute 4 million TEU container terminal in the outer harbour of the port at a cost of Rs 7055.95 crores. The interesting feature of this project is that the project will be awarded to the bidder quoting the lowest subsidy (Viability Gap Funding which is capped at Rs 1950 crores). This is for the first time in the history of major ports PPP projects, bids will be decided by the lowest VGF instead of the normal revenue share or royalty basis adopted so far. Unlike in India where the award of the PPP projects in the port sector is based on a single and simple criterion like royalty/revenue share after shortlisting of candidates has been done on the basis of technical criteria, the international practices in this regard seem to be quite complicated. A large diversity exists among European ports. Some of the criteria followed in European ports range from micro-economic objectives such as profit maximization or throughput maximization and macro-economic objectives such as the creation of value-added for the community and employment, environmental compliance etc.  Rotterdam port focused on modal split, as this is such a key determinant of the environmental performance of the port. Antwerp also discusses modal splits with potential candidates. However, they have not incorporated such targets in concession agreements. The practices vary in other countries like Oman, where weightages are given both for financial and technical criteria; lowest price to the end customer as in Brazil. The concessions in Spain followed evaluation of the business plan (30 percent), the technical and operational proposal (40 percent), and the financial bid (30 percent). UK follows fully privatised port model. USA Port authorities often look beyond the four corners of the property at the broader impacts of a terminal proposal: does the bidder have the right incentives and wherewithal to grow the amount of cargo and carriers coming to the port? How will the deal impact waterfront labour unions? How will the ecosystem of other maritime businesses surrounding the port be affected? How is the bidder proposing to meet its environmental compliance responsibilities and also address community concerns regarding pollution, congestion, noise, social justice, security and other issues? Some other countries like Greece in Europe which were awarding Terminals on nomination basis abandoned the practice as EU was against awarding concessions on any basis other than competitive tendering. Some prominent PPP players in India are advocating fully privatised port models to derive full economic advantage for the country. Government of India is also moving towards a full Landlord Model, JNPA is the primary example.  

EFFORTS OF PORT TERMINALS TO REDUCE EMISSIONS-COPA It was reported by IndiaSeaTrade News that the two major container port and terminal operators viz., DP World and APM terminals formed Zero Emission Port Alliance (ZEPA) and announced it at COP28. ZEPA is aimed at accelerating the process of zero emissions for container handling equipment (CHE) at ports. ZEPA will work to increase the industry-wide adoption of battery-electric CHE (BE-CHE)and catalyse further emission reduction at ports. BE CHE can become a game changer in pollution reduction at ports. ZEPA membership is open to all industry participants, including terminal operators, OEMs, port authorities and Governments entities. The focus on battery-electric equipment is grounded in research commissioned by the two companies. The findings show that BE-CHE can be more competitive than diesel and is also more affordable. Let us congratulate the two port operators for taking a great initiative!!

Extension of Concessions for existing Port PPP Operators- The port privatisation process started in India in 1996.  With a few PPP concessions awarded during the initial period, some of these concessions will be ripe for completion, as these were 30 year concessions. However, there is a trend internationally to allow the Operator to continue with an extended mandate. Recently Drewery conducted a Study in the regard. They reviewed 27 concessions that were renewed , extended or had expired over the past three years , and while the majority (21 out of 27) were awarded to the incumbent operator via renewal or extension of the initial concession, six were allowed to expire. Drewery believes that retendering a port terminal concession in a mature market with competing terminals either within the same port complex or serving the same hinterland is unlikely to achieve significant gains for the port authority. Therefore, given the costs of public tender, the uncertainty surrounding the process and the inherent risks involved in changing a terminal operator, it is a more sensible to approach these concessions with an extend/renew framework. With an experience of more than 25 years and with over 30% of the Terminals in the major port sector having been awarded on PPP basis and availability of many more opportunities for new players with Government’s plan for transformation of all the major ports as Landlord Ports, there is a strong case for allowing the existing concessions to be extended when their time comes for completion. Government has already introduced a renewal clause for new concessions awarded after 2021.