More ports planned in India than the country actually needs
There are more ports planned in India than the country actually needs.There seems to be a herd race for developing ports. The cumulative capacity of all port projects being discussed if added could surpass current global trade.
Government is certain that some will be realized and in 2020 the capacity will be 2.2 bn tones, roughly 3 times current traffic and about 25% of current global trade.
Is there something seriously wrong with Indian Ports Sector?
Analysis
In financial year 2010, Indian seaports handled 850 mn tonnes of cargo, about 9% of the global trade. Shipping Ministry is planning to augment the capacity of port to 2,200 mn tonnes by 2020, which is roughly 25% of current global trade. Is it not too much knowing India’s trade pattern which is dominated by raw materials, export iron ore and import coal and crude oil.
Take Gujarat for example, the fastest growing industrial state in India. With well developed infrastructure it is in a better position to cater to land locked North & Central India which houses India’s roughly 50% of population.
It has more than 41 ports (including Kandla) and is ever ready to declare a new port if it is permitted to do so. With a coast of 1,600 kms, on an average there is a port at every 40 kms. But how many of them are doing or could do well is a big question?
Gujarat, in 2010, handled about 285 mn (about 34%) tonnes of 850 mn tonnes cargo handled at Indian ports. Does that mean, this is the best state to invest in ports?
Kandla Port, Mundra Port, Sikka, Dahej, Magdalla, Gujarat Pipavav Port are the 6 ports that handled close to 85% of the 285 mn tonnes of cargo landed in Gujarat in the year 2010. Rest all ports handled about 45 mn tonnes. Is this an attractive proposition to invest in ports.
There are 2 projects which are currently hot cakes in Gujarat namely Nargol port for port developers and second is Vansi Borsi for consultants. There is one more port being developed at Dahej by Adani Group. All 3 are spread over a distance of 70 nautical miles. All would be fighting for same hinterland cargo.
Dahej is getting commissioned with equipments being installed. Nargol located roughly 80 nm north of Mumbai in Maharashtra where roughly 130 mn tonnes (about 15% of India’s port traffic) was handled. There are a dozen of Infrastructure giants bidding for Nargol project. Some of the firms selected are IL&FS, GVK, GMR Infrastructure, Sterilite, Marg, IVRCL, Mundra Port & SEZ, Allcargo Global Logistics and several others.
By the time Nargol project is awarded, consultants would be ready to invite developers to bid for Vansi Borsi. Not sure if all these ports will bring economic benefits to developer. They are certainly likely to create opportunities for port consultants in India.
Source: Live Mint
