Major state-run ports look to satellite ports for expansion

Future expansion of government-run ports in Chennai, Paradip and the Jawaharlal Nehru Port Trust (JNPT) in Mumbai will be through the setting up of satellite ports, two government officials aware of the development said. Not only will it ease congestion at these ports, it will also ensure that they don’t lose out on business.

A satellite port can either be existing or is created near a port that is reaching capacity. Satellite ports help overcome issues such as limited land availability and draft adequacy, which is depth of water to which a ship sinks according to its load.

While Chennai and Pondicherry ports signed a deal on March 14 to convert the latter as a satellite port, talks are on to expand Outer Harbour Paradip Port too into a satellite port.

Similarly, Mormugao port in Goa is also exploring options to expand its infrastructure, including constructing a satellite port at Betul in Goa.

JNPT, which ships more than half the containerized cargo passing through India’s ports, is in the process of acquiring Vadhavan Port in Maharashtra, which was approved by the government in 2015 to act as its satellite port.

“Over the last three years, the major ports have started showing remarkable performance. It’s a growth story for which investment is required,” said the first of the two officials requesting anonymity

The 12 major ports under the shipping ministry handled 647.43 million tonnes (mt) of traffic in 2016-17.

They registered an annual growth rate of 6.79%, as compared to 4.32% in 2015-16, outperforming private ports for the second consecutive year, which clocked a traffic growth rate of 4% for the last financial year.

This comes in the backdrop of plans by major ports to raise close to $750 million in external commercial borrowings, Mint reported in March.

“This is the beginning,” said the second official while commenting on the major ports acquisition plans of the satellite ports.

India has envisaged Rs8 trillion of investment until 2035 under the Sagarmala programme, which involves the construction of new ports to harness the country’s 7,517km coastline and setting up of as many as 142 cargo terminals at major ports.

Experts term it as a good move given that some of the major ports are choked for capacity.

Manish Sharma, transport and logistics leader at consulting firm PwC endorses the concept of satellite ports.

“Greenfield ports are inherently risky to develop but by promoting satellite ports, the major ports cannot only address their own expansion challenges, at an attractive nearby location, but also help address greenfield risks for such new satellite ports by diverting incremental cargo and over time enable these satellite ports to become sustainable,” Sharma of consulting firm PwC said.

Chennai Port’s agreement with Pondicherry will help revive the commercial operations of Pondicherry Port as there is a huge potential for coastal movement of container cargo from the Pondicherry Port’s hinterland.

JNPT handles more than 40% of India’s total container traffic serving a vast hinterland comprising all of northern and western India.

“Once the fourth container terminal becomes ready for operation, there would be limited space in JNPT and thus it has been decided to develop a satellite port for JNPT. The proposed location is about 190km north of JNPT and has deep draft of about 20 metres close to shore, which makes it feasible to handle bigger size of container ships,” said the second official.

SATELLITE PORTS WILL NOT ONLY HELP EASE CONGESTION AT THESE PORTS, IT WILL ALSO ENSURE THAT THEY DON’T LOSE OUT ON BUSINESS.