Mumbai: India's government may miss a target to add capacity at its 12 major ports as the economy grew less than anticipated and global trade slumped amid a recession, writes Bloomberg quoting the shipping secretary.
The government-controlled ports will have a capacity to handle 743m tons of cargo by March 31, 2012, compared with a target of 1.02bn tons, K. Mohandas, the shipping ministry's top bureaucrat, said in an interview in New Delhi.
Investment requirements in the five years to March 2012 may drop 61% to 220bn rupees ($4.7bn), Mohandas said yesterday. India's economic growth slowed to 6.7% in the year ended March as the global recession damped world trade, prompting sea carriers to park vessels. The slowdown needs to be used to ramp up infrastructure, said Anand V. Sharma, a ports and shipping consultant.
"There is greater reason to make investments now because commodity prices have come down and interest rates have declined bringing down the cost of port development," said Sharma, director, Mantrana Maritime Advisory Pvt. Ltd. in Mumbai.
India's finance ministry has said inadequacies in the country's ports, power, roads and other infrastructure shaves about two percentage points off the economic growth rate. Asia's third-biggest economy seeks to double its share in global trade by 2020 from 1.64% in 2008, Commerce and Industry Minister Anand Sharma said November 11.
The volume of cargo at the major ports is expected to rise to 650m tons in the year to March 2012, Mohandas said.
"The expected level of growth was not seen in the last two years," Mohandas said. Still, "capacity will be adequate depending on traffic projections, depending on everybody's assessment of movement of world trade and India's share in world trade."
India's economy should return to 9% growth in two years, Finance Minister Pranab Mukherjee said Nov. 10. About 95% of the nation's trade by volume and 70% by value are moved through sea, according to the government.
The country's 12 biggest government-controlled ports had a capacity to handle 574.77m tons of cargo in the year ended March 31, 2009, compared with the 530.53m tons of freight moved through them in that year.
Of these, the eastern ports of Visakhapatnam and Chennai and the western ports of Mormugao and Mumbai handled cargo exceeding their capacity.
Ports owned and operated by private companies may benefit from lower capacity addition at major state-run ports, Mantrana Maritime's Sharma said.
Mundra Port and Special Economic Zone Ltd., India's largest non-state cargo terminal, Gangavaram Port Ltd. and Krishnapatnam Port Co., both located on the east coast, are amongst the biggest private ports in the country.
3i Group Plc, a London-based private-equity investor that owns stakes in Krishnapatnam and Mundra Port, said in September it is looking to make its third port investment as India's freight traffic exceeds capacity. Warburg Pincus LLC, the New York-based private equity firm, owns a stake in Gangavaram Port.
There are 17 projects for facilities such as container terminals and shipping berths pending award at major ports in the country. These will add up to 183.5m tons of cargo capacity, Mohandas said. As many as five projects, totaling about 50m tons, will be awarded by the end of March, he said.
The remaining will spill over to next year, some delayed due to disputes, Mohandas said, without elaborating.
"Implementation is getting delayed as one has to go through several clearances," Mantrana Maritime's Sharma said. "In the bidding process, if someone doesn't qualify and goes to court it delays the projects."
The government is seeking to improve the efficiency at major ports it owns, Mohandas said.
The average turnaround time for ships at Indian ports was 3.85 days in the year ended March 31, 2009, compared with 10 hours in Hong Kong, the government said in its latest annual economic survey.
The pre-berthing waiting time at major ports declined to 9.59 hours in the year ended March 31, 2009 from 11.40 hours in the year earlier period, the government said. [31/12/09]
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