Ports & Shipping News

July 25, 2011 July 31, 2011

India Infrastructure Publishing B-17, Qutab Institutional Area New Delhi 110016 Tel: 91-11-4103 4600 / 4601 Fax: 91-11-2653 1196 E-mail: info@indiainfrastructure.com

Ports The Ministry of Shipping (MoS) plans to raise Rs 20 billion through tax-free bonds by September 2011. The Ennore Port and Jawaharlal Nehru Port Trust (JNPT) will each raise Rs 10 billion respectively. It is reported that the two ports were given the permission first due to their high credit rating which would assist in raising funds at a relatively lower borrowing cost. The Union Budget for 2011-12 allowed issue of Rs 300 billion tax-free bonds for infrastructure development, of which Rs 50 billion has been earmarked for the port sector. Further, the Union Government plans to float a company Indian Ports Global to invest in overseas ports. The idea is along the lines of Dubai Ports World (DP World) and Port of Singapore Authority (PSA). The company will be allowed to raise Rs 30 billion tax-free bonds. Meanwhile, MoS has put in place the draft of a proposed new ports Act titled the Indian Ports Bill, 2011 by combining the existing two statutes regulating the port sector into a single piece of legislation. MoS is expected to soon forward the proposal to the Cabinet for approval. According to a circular on the MoS website, the draft of the Indian Ports (Consolidated) Act, 2010 has been prepared after a thorough review which, if enacted as legislation, would repeal both the existing Indian Ports Act, 1908, as well as the Major Port Trusts Act, 1963. In the proposed new legislation, various changes which inter-alia includes provisions relating to ISPS Code, P.P. Act, 1971, common recruitment rules for heads of the departments of major ports, overriding powers of the Union government have been incorporated. MoS has requested that all stakeholders/maritime states should furnish their comments to the ministry by August 21, 2011. The Union Government plans to proceed with the proposal of corporatising ports. At present, the only major port to have a corporate structure with a board of directors in place is Ennore Port. A corporate structure would first be initiated at JNPT, followed by the 10 other major ports. JNPT, which is planning a fifth container terminal along with other facilities at Nhava Island, has invited proposals for consultancy services for developing port facilities at the proposed site. The terminal is expected to add a capacity of eight million twentyfoot equivalent units (TEUs) to the port. Meanwhile, as part of its upgradation process, JNPT had awarded the contract for supply of three rail-mounted quay cranes (RMQCs) to the Korean company, Doosan Heavy Industries. The cranes, measuring about 25 m in length and width and with a towering height of more than 60 m, weigh nearly 1,100 tonne each. The provisional capacity of Indian ports stood at 1,061.79 million tonne per annum (mtpa) as on May 30, 2011. Of this, the capacity for major ports and non-major ports stood at 670.13 mtpa and 391.66 mtpa respectively. Kandla and Chennai ports were the largest contributors for major ports with 86.91 mtpa and 79.72 mtpa respectively. Among non-major ports, Gujarat was the largest contributor with 284 mtpa of capacity which represents almost 73 per cent of the total capacity of the non-major ports. Petronet LNG Limited (PLL) plans to set up five mtpa liquefied natural gas (LNG) terminal on east coast of India with an investment of $1 billion. The companys board has decided to carry a detailed feasibility report (DFR) for the new LNG terminal. The study will be done by a consultant and is expected to be completed in the next five-six months. An initial survey has shortlisted six-seven locations along the east coast. Out of these, Dhamra, Kakinada and Gangavaram are the favoured locations. The terminal would take 42-46 months to get commissioned after construction starts. PLL may tie-up with other players for its third LNG terminal. The project will be financed by both debt and equity. The commissioning of the third terminal in east coast will take PLLs total capacity to 25 mtpa, which the company targets to achieve by 2016. The Kolkata Port Trust (KoPT) plans to systematically renovate the Kolkata Dock System and Haldia Dock Complex in the near future. The plan includes removal of silt to increase draught, facilities for transloading through new jetties and an extensive railway network between Kolaghat and Haldia to reduce logistics cost. The Chennai Port Trust (ChPT) is getting ready to possibly move coal and iron-ore to the nearby Ennore Port following a direction from the Madras High Court. MoS asked the Chennai Port Trust (ChPT) officials to prepare an alternative marketing strategy to improve the trade volume after the shifting of dusty cargoes to other ports.

Ports & Shipping News

July 25, 2011 July 31, 2011

India Infrastructure Publishing B-17, Qutab Institutional Area New Delhi 110016 Tel: 91-11-4103 4600 / 4601 Fax: 91-11-2653 1196 E-mail: info@indiainfrastructure.com

The Mumbai Port Trust (MbPT) has decided to earmark custom-bound area (covered/open) at
Frere Basin shed number-1 and shed number-3 for pre-delivery inspection facility, to encourage exports of automobiles through the port by ensuring quality check before shipment. The custom-bound area will cover a total area of about 5,300 square metre (sq m) and 500 sq m adjacent open area on captive use basis. The Kerala government is focusing on development of coastal shipping in the state which is expected to decongest the road network. The state government has initiated steps for the formation of a Kerala Maritime Board, which will bring quicker decisions for ports and shipping along with the development of coastal shipping in the state. The Cargo Handling Labour Pool (CHLP) of the Tuticorin Port Trust has merged with the V O Chidambaranar Port Trust. This is expected to result in a 30-per cent reduction in labour cost and nearly 50 per cent increase in productivity. The Dhamra port in Orissa, a joint venture between the Tata Steel Limited and Larsen &Toubro Limited (L&T), has received its first Capesize vessel China Steel Responsibility. The Chinese bulk carrier, having a capacity of 180,000 deadweight tonnage (DWT) capacity, shipped in nearly 150,000 tonne of coal from Australia for Tata Steel. A berth at Dighi Port in Raigad district of Maharashtra has been procured by the recently formed Hiranandani Electricity Generation Company (HEGC), a part of Hiranandani Construction Group. The plan is to set up a terminal for gas supply to its proposed 400 MW power generation plant at Talegaon near Pune. The gas-based plant, is to be set up at an estimated cost of Rs 17 billion by next year and would gradually expand its capacity to 2,500 MW at a cost of Rs 100 billion. DP World has inaugurated a pilot solar power system at its Indian facility in Nhava Sheva, which will allow the Mumbai terminal to harness solar energy for its energy requirements. According to reports, the system will reduce the terminal's annual power consumption by 14,000 kilowatts per hour (kWh), and reduce greenhouse emissions. India and Sri Lanka signed a memorandum of understanding (MoU) to develop the Kankesanthurai port, the first such deepwater facility to be rebuilt in northern peninsula of Sri Lanka. The port is expected to reduce the transit time of goods from and to India, Bangladesh and the neighbouring countries and would give impetus to the economic activity in the region. Shipping According to reports, the shipping firms could face the prospect of a 20-per cent jump in cost of operations due to the high price of bunker oil, which constitutes 40 per cent of the total shipping cost. Moreover, the crisis in Europe and other macro-economic factors are expected to have a negative impact on the industry. During the first quarter (April-June) of 2011-12, Great Offshore Limited has posted a growth of 17.57 per cent in total income at Rs 2.81 billion as against Rs 2.39 billion during the corresponding quarter of the previous year. The net profit for the period also rose to Rs 549 million from Rs 267.3 million during the same period. JNPT has hired a 60-tonne bollard pull tug Ocean Harmony from Ocean Sparkle Limited for a period of five years. The tug has a bollard pull of 62 tonne at 90 per cent MCR and a maximum bollard pull of 65 tonne. This will assist the port in handling of the increasing sizes of vessels, facilitating enhanced safety during the handling of large ships. This tug has replaced a 45-tonne bollard pull hired tug which completed its contract period on July 19, 2011. ABG Shipyard is currently looking at a tie-up with a partner to enter the platform building segment for oil exploration in offshore areas. Platforms are permanent structures for oil and gas drilling and are positioned beside the spot where a jack-up rig is placed for drilling purpose. According to sources, the company is in the process of studying the business and is in talks with global firms in this regard.

Note: Rs 1 crore = Rs 0.01 billion; Rs 1 lakh = Rs 0.1 million; Rs 1,000 million = Rs 1 billion