A squall approaches one port…

Dubai Ports Authority (DPA) is ranked as the eighth top container port worldwide. After it acquired P&O it also acquired the right to manage around 51 container ports across the world in over 24 countries.

R N Bhaskar, Consulting editor LOG.india

It is today one of the largest port operators in the world. In India, it manages eight terminals, notably at JNPT (near Mumbai), Cochin, Vishakhapatnam, Vallarpadam and Mundra. And it is at Mundra that a very unusual wind is threatening to become a squall, if not a hurricane.

When Mundra set up its port terminals the management of the same was given to P&O, which was later taken up by Dubai Ports World (DPW).

Under DP World management, Mundra has seen its business grow. The cargo it has handled has swelled from 11.7 million (m) tonnes during 2005-06 to 19.8m tonnes during 2006-07.

Over these years it has handled a total of 56.9 million tonnes of cargo (40.3 million tonnes of bulk cargo, 3.7 million tones of crude oil cargo and 1,079,000 twenty-foot equivalent units (TEUs).

To further expand capacities and become the largest port in India, Mundra is now building additional terminals, and the port management team wants to manage the new terminals itself.

But that does not appear to have gone down well with DP World which wants to manage the new Mundra terminals as well. In the absence of any positive response from the managers of the port, DP World has now decided to file a case in Indian courts against the Mundra Port management, insisting that nobody can have the right to manage the new terminals at the port without first giving DP World the right of first refusal.

The Adanis of Mundra obviously want to ensure that nothing goes wrong with their expansion plans at the port, and are reported to be in active discussions to paper over any differences that may exist between people at DPA and the management at Mundra.

Obviously, with a public issue just round the corner, the Mundra management would be loath to see such differences being aired in public forums. Astute as Adani is known to be, it is unlikely that this difference will be allowed to blow into a full-fledged storm.

Uncertain Winds The Adani story with the Mundra port has taught port watchers one lesson – While the Union government conveniently designates all Union government-owned and managed ports as major ports, and those managed by the state governments as minor ports, the definitions could soon become a joke. Mundra – classified as a minor port because it is promoted by the state government – is likely to become bigger than any of the major ports. Similarly at least three other minor ports, with aggressive private managements backing them, are beginning to show interesting signs of activity.

Damra, on the Orissa coast on India’s eastern shore, is one of them, being built jointly by the Tatas and L&T. It is a deepwater port, and a bit of dredging could make it as deep as Mundra. And though decent rail and road linkages to this port are missing, the Tatas are not complaining as they want to use it primarily as a captive port, much in the manner as the Mukesh Ambani group manages and owns the Jamnagar jetties, and the Ruias of Essar own and manage the captive jetties at Hazira, both in Gujarat. Captive ports can be a very profitable proposition, as they allow the promoters to develop their own logistics for export and import of goods.

Moreover, two other “minor” ports that are coming up on the country’s eastern coast hold a lot of promise. One of them is Nagapattinam, being promoted by Marg Constructions. The second port is the Krishnapatnam Port promoted by the Natco Pharma Group. Both of them promise to become “major” ports in a few years’ time.

Evidently, the minor ports are out to prove that they are better than the major ones. And unless the Union government changes its policy framework and allows for private enterprise and faster expansion approvals with linkages, the major ports could lose a lot of business. More alarmingly, this could adversely affect the fortunes of their host cities as well – especially Mumbai, Chennai and Calcutta.

R N Bhaskar Consulting editor LOG.india