The Indian ports in the last 25 years have made remarkable progress through the PPP mode of investment, beginning with the Jawaharlal Nehru Port (JNP), resulting in capacity addition and productivity improvement.
The sustainability of the first agreement between the concessioning authority and concessionaire on PPP mode, which completed its 25th year of success in July, this year, has had a tremendous impact on the development of PPP projects in major ports. Now, JNP has become the first major port in the country to become a 100% Landlord port having all berths being operated on the PPP model.
Ranked 26th among the top 100 global ports (as per Lloyds List Top 100 Ports 2021 Report) JNP currently operates five container terminals, of which only one is port owned. With its state-of-the-art facilities JNP meets all the international standards, user-friendly atmosphere, and excellent connectivity by rail and road to the hinterland. The facility of backup infrastructure like CFS, connectivity with ICDs, full-fledge Custom House, Airport, Hotels, proximity to Mumbai, Pune, Nashik city, and its industrial belt make it a unique container terminal.
The Jawaharlal Nehru Port Container Terminal (JNPCT) has 2 berths with a total length of 680m and a 15m draft which will be handed over under this PPP contract along with a backup area of 54.74 hectares for 30 years.
JNPCT is presently handling 9000 TEUs capacity vessels and with the upgradation, it can handle 12200 TEUs capacity vessels. It is also proposed to increase the RMQC rail span from 20 meters to 30.5 meters at the port. Investment for this project will be carried out by the concessioner at a total cost of Rs. 872 crores. The concessioner has to upgrade, operate, maintain and transfer this terminal on a PPP basis. This project will be implemented in 2 phases.
- In Phase I, 400 meters berth length will be upgraded to handle 12,200 TEUs capacity vessels (370 LOA vessels of 15 meters draft and 56.4 Beam). JNPA has placed a Letter of Award (LOA) to J M Baxi Ports and Logistics Ltd. and consortium member CMA Terminals on 28/06/2022 and the concession agreement will be signed on 27/07/2022. The concession will be Awarded after compliance with the conditions within 180 days. The period of phase I is 18 months from the date of award of the concession agreement and the cost of phase I is Rs. 591.99 crores.
- In Phase II, 280 meters berth length will be upgraded to handle 12,200 TEUs capacity vessels. The development of phase II will be commenced after achieving 1.02 million TEUs or 7 years whichever is earlier. Phase II is to be completed within a period of 18 months and the cost of phase II is Rs. 280.17 crores
11 investors having both domestic and international presence have shown their interest in the project.
To win the tender, the equal joint venture between J M Baxi Ports and Logistics Ltd. and CMA Terminals offered a royalty price of Rs. 4,520 per TEU during the concession period.
The royalty due will increase yearly in line with the rise based on the wholesale price index (WPI). Under the new Major Port Authorities Act and the model concession agreement (MCA), the terminal operator is free to fix market-determined tariff rates. The MGC is expected to increase from 4 lakh TEUs in the first year of operation to 9 lakh TEUs starting in the tenth year and continuing through the end of the 30-year contract.
PPP is considered an effective tool for attracting investment in the port sector. Until now 86 projects worth Rs. 55,000 Crores have been approved PPP. The key projects on PPP being implemented include berths, mechanization, development of oil jetty, container jetties, O&M of the container terminal, O&M of International cruise terminal, Commercialization of non-core assets on PPP mode, Tourism projects, viz., marina, development of islands to promote tourism. With the cargo volume expected to increase between 1.7 to 2 times (of 2020) by 2030, the percentage of cargo handled at Major Ports by PPP or other operators is expected to reach 85% by the year 2030. Each passing year is a milestone to achieve this goal.
To achieve this goal, MoPSW has already identified a project pipeline up to FY 2025 with 13 projects, for FY 2022 (Rs. 6954 Crores) already approved by the MoPSW followed by 24 projects of value ~Rs. 12,550 targeted for the award in FY 2023. Further, 44 projects of value ~Rs. 23,000 crore are scheduled for award in FY 2024 and FY 2025. High-value projects namely the Western dock at Paradip and JN Port Container Terminal of a total value of more than ~Rs. 3,800 crore have already been awarded two projects of DPA, valued at ~Rs. 6000 crore, are under the RFQ stage.
“As the Prime Minister Shri Narendra Modi has envisaged that PPP is grounded on the principle of inclusion of the private enterprises as able partners towards progress, this project will improve the utilization in crane and berth productivity of the terminal. Also, the total handling of JNPCT will increase to 1.8 million twenty-foot equivalent units (TEUs) from the present handling capacity of 1.5 million TEUs in 2020-21. This will reinforce JNPA’s position as the ‘Premier container port of India’. It is worth mentioning that this terminal will also be handling Ro-Ro vessels which will not only lower the logistics cost, reduce transit time but will also contribute to reducing congestion on roads and promoting the clean environment”.Sarbananda Sonowal, Union Minister of Ministry of Ports, Shipping and Waterways