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Port sector revival held up on funds crunch
2009/3/26
Expansion and greenfield projects at Indian ports have almost ground to a halt as an economic slowdown has choked investment into the sector, which holds great potential as a growth driver according to industry players said, Reuters reported.
A fund shortage has delayed expansion at several Indian ports, raising concerns of higher time lags and congestion after an expected traffic revival in June, they added.
"Apart from two to three terminals coming up in three to four major ports, other projects are expected to face delays," said Manish Sharma, director at consultancy firm KPMG.
Among these are JSW group''s captive port on India''s eastern coast, Reliance Industries'' Rewas project on the west coast, besides a few others in south India.
Much of the estimated US$11 billion needed to revive the sector was expected to come from private players. However, this is unlikely due to longer gestation period, tighter credit and a sharper-than-expected drop in economic growth, analysts said.
India is expected to grow around seven percent in financial year 2009, its slowest in six years, with even slower growth seen next year.
However, cargo traffic is expected to see a revival in June, but the country''s 12 major ports – which saw volume drop over eight percent in the period April to February 2009 compared with last year – are not equipped to handle it, analysts said.
"A scenario where capacity additions are put on hold, while cargo volumes pick up in due course could potentially lead to the recurrence of extreme port congestions in the future, similar to those witnessed in the recent past," KPMG''s Sharma said.
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2009/3/26