Financial Daily from THE HINDU group of publications
Monday, Sep 02, 2002
A Dubai Ports Intl-J.M. Baxi JV State-of-the-art container terminal for Vizag
recently in Visakhapatnam
UNLIKE last year, this September 11 may be an occasion to rejoice for many, particularly the Visakhapatnam Port Trust (VPT) and the Visakha Container Terminal Private Ltd (VCTPL), the joint venture company floated between Dubai Ports International, a wholly-owned subsidiary of Customs and Free Trade Zone Corporation of Dubai, and United Liner Agencies (ULA) of the J. M. Baxi Group.
On that day, the VPT, if everything goes as scheduled, will enter into a licence agreement with VCTPL, leasing out its 450-metre multipurpose berth in the outer harbour to the joint venture company for 30 years.
The joint venture company will, in turn, invest more than Rs 100 crore initially on the mechanisation of the berth and creation of other facilities to set up a state-of-the-art container terminal there. Once the agreement is signed, VCTPL will start working on the mechanisation.
"The first cellular vessel should call at the berth in April next year," according to Mr Krishna Kotak, Managing Director, J. M. Baxi Group. The group holds, through its outfit ULA, 74 per cent equity in the joint venture company, the balance 26 per cent being held by Dubai Ports International. As per the understanding reached with the VPT, commercial operations should start within nine months of the signing of the lease agreement. "We are trying to start operations even before the expiry of the stipulated period," said Mr Kotak.
This optimism is not without basis. VCTPL, following the agreement, will gain control of a readymade berth with a backup area of 70,000 sq. m. of which more than 40,000 sq. m. is paved. It may be noted that the berth, built by the VPT at a cost of over Rs 50 crore, has been lying idle for the past two years. The waterfront to the berth will have an average draft of 16.5 metres, enough to handle even 1,500-TEU capacity vessels with full load. The berth has already got water and lighting facilities and road access. Marine and pilotage support services will be provided by the port. The environment clearance has been obtained.
Also, as Mr Kotak pointed out, agreements would be finalised soon with a Japanese firm to purchase two second-hand rail-mounted quay gantry cranes (RMQGCs), one built by Mitsubishi and the other by NKK. Among other equipment proposed to be acquired for the berth are two rubber tyre gantry cranes (RTGCs), two reach stackers, two empty handlers and eight tractor trailers. Except the RTGCs, which would be of Mitsubishi make, all other equipment would be acquired indigenously, most probably on lease. In addition, VCTPL would be required to construct administrative building, set up a workshop and a sub-station and lay about a kilometre-long rail-line.
Initially, it was thought that VCTPL would not install cranes till the berth had achieved a throughput level of at least 100,000 TEUs annually. However, the plan was subsequently abandoned. The company would go ahead with the full mechanisation of the berth. "We would like to send the right signal to the prospective users that we are ready from Day 1 with everything that is needed for smooth and efficient functioning of a modern container terminal," Mr Kotak said.
While Dubai Ports International will provide the management consultancy to VCTPL in the form of technical knowhow for operation, front-end engineering, equipment procurement, system development and manpower selection, the Indian partner will be responsible for project management during the construction period and marketing the terminal.
The project management so far has been on schedule, but marketing issue remains the most crucial.
The J. M. Baxi Group seems confident of success in marketing and thus achieving a throughput level of 100,000 TEUs in the third year of operation. Right now the port handles about 21,000 TEUs.
It is felt that the terminal, given its location and rail/road connectivity, can evolve into a feeder port to start with, but eventually develop into a hub port providing direct services for the traffic to and from South-East Asia and the Far East.
Will not VCTPL face stiff competition from Chennai Container Terminal Limited (CCTL) now under P&O Ports ?
Mr Kotak does not think so. VCTPL, according to him, will target a different hinterland eastbound cargo, both in and out, to and from northern India, a portion about 30 per cent of the traffic currently being handled by Haldia/Kolkata and Andhra Pradesh cargo currently being diverted to Chennai and JNPT. "In addition, we have set our eyes on parts of Madhya Pradesh, Orissa, Chattishgarh, Jharkhand, Bihar and West Bengal for traffic," he said.
This should be possible because services at VCTPL, it is claimed, will be comparable to those offered by NSICT/JNPT, if not better; also, the tariff will be competitive vis-a-vis Tuticorin and Chennai and will be certainly lower than that at JNPT.
The transhipment of traffic to and from Kolkata/Haldia, he felt, could be at VCTPL instead of either at Colombo or at Singapore as at present. If VCTPL becomes the transhipment point in preference to Singapore/Colombo, then fewer vessels would be needed for feedering, and the steaming time would also be much less. There was considerable potential for transhipment of cargo to and from Bangladesh, he added.
Container Corporation of India (Concor) has to play a key role to provide the crucial connectivity to VCTPL's berth. Inquiries with Concor reveal that it is gearing itself up to provide the necessary connectivity, especially because of the congestion problem on the Delhi-JNPT/NSICT corridor.
The congestion often causes delays causing concern to both shippers and the shipping lines. There is, therefore, no reason why the traffic to and from the South-East Asia and the
Far East, instead of being routed through the west coast ports as at present, should not be routed through the VCTPL's terminal at Visakhapatnam. There is already rail connectivity (Delhi-Bina/Katni-Bilaspur-Raipur-Vizag) and Concor too is believed to be having surplus capacity to move traffic through the east.
"We want to prove to the world that the Indians too can build and operate a world class container terminal as efficiently as anyone else in the world," said Mr Kotak emphatically exuding optimism.
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