|
Investors may shun Indian ports
2009/2/26
Private firms are likely to shy away from the Indian federal government''s ambitious plans to attract investments in the country''s ramshackle ports because of archaic laws and red tape, according to a senior World Bank official, Dow Jones reported.
The federal government has outlined a plan to modernize the infrastructure at 12 major ports, and improve 187 smaller ones at a cost of over US$20 billion by the fiscal year ending March 31, 2012.
"Unless conditions for private investment change radically and planning capacity at these ports improve, this level of investment is unlikely to materialise in the timeframe envisaged," George Tharakan, lead transport specialist of World Bank for South Asia, told Dow Jones Newswires in a recent interview.
He said there was lack of clarity in the regulatory framework, particularly on the proposed concessions for private investors.
A large number of maritime and transport laws, overlapping areas of operations between port authorities and private berth owners, lopsided labour laws make port operations unattractive to private companies.
While private berth operators are subject to tariffs fixed by the regulator and governed by the Major Port Trusts Act, adjacent state-run ports with competing traffic do not fall under the purview of the regulator.
The volume of cargo at local ports, already struggling to cope with 519.2 million tonnes at 12 ports in the fiscal year ended March 31, 2008, is expected to shoot up to 1.2 billion tonnes by 2011-12.
About 75 percent of the cargo is handled by these major ports and 90 percent of the value of the total inbound-outbound trade is through the sea route.
After a jump in India''s port capacity during the two years between 2000-02, the rate of capacity increase of Indian ports appears to have slowed, with only a five percent per annum increase in capacity during 2004-05, Tharakan said.
He said this was because few investors had come forward due to red tape resulting in delays in granting approvals for starting operations. For instance, the government approved building a fourth shipping terminal at Jawaharlal Nehru port in 2005, but the contract is yet to be awarded.
"Given the challenges facing the port sector with regard to the rapidly expanding demand, this slowing capacity growth is worrisome," Tharakan said.
"The port sector needs to gear itself, without delay, to meet the demands that this sort of growth will generate," Tharakan said.
India''s container shipping traffic is expected to increase to 21 million TEUs in 2015 from 4.5 million now.
It also takes four times longer than rivals elsewhere in Asia to load and unload ships.
Inadequate drafts, or shallow water-depths, are also a major constraint at Indian ports. Ports such as Jawharlal Nehru Port, close to the western city of Mumbai, have an average draft of 12 meters compared with neighbouring Colombo, which has 15 meters.
|
2009/2/26