MULTI-DISCIPLINARY ISSUES TRANSCONTINENTAL INFRASTRUCTURE NEEDS TO 2030/2050 MUMBAI GATEWAY AREA CASE STUDY OPPORTUNITIES AND CHALLENGES FINAL REPORT Contact persons: Barrie Stevens: +33 (0)1 45 24 78 28, [email protected] Pierre-Alain Schieb: +33 (0)1 45 24 82 70, [email protected] Anita Gibson: +33 (0)1 45 24 96 72, [email protected] March 2012 1 Note: This paper contains content prepared by the OECD project team together with input on many aspects prepared by representatives of the Overseas Infrastructure Alliance (OIA), India who were members of the OECD project Steering Group. A number of the reports consulted were prepared before the onset of the Global Financial Crisis. The projections and related material from such reports needs to be reviewed for currency and completeness and updated with more recent information where possible. 2 TABLE OF CONTENTS CHAPTER 1 INTRODUCTION................................................................................................... 5 CHAPTER 2 OVERVIEW OF INDIAN PORTS AND KEY TRENDS IN PORT HANDLING 7 CHAPTER 3 MUMBAI GATEWAY AREA – SITUATION .................................................... 17 CHAPTER 4 HINTERLAND CONNECTIONS ........................................................................ 23 CHAPTER 5 LONGER TERM OUTLOOK AND GROWTH POTENTIAL ........................... 27 CHAPTER 6 MUMBAI AND JNPT PORTS – OPPORTUNITIES AND CHALLENGES ..... 29 CHAPTER 7 FUNDING OF PORTS IN INDIA ........................................................................ 59 CHAPTER 8 OPPORTUNITIES FOR INDIA’S MAJOR AND “NON-MAJOR” PORTS ...... 73 ANNEX A STUDY ON A MAJOR PORT – TUTICORIN ....................................................... 77 ANNEX B STUDY ON A MINOR PORT – MUNDRA PORT ................................................ 84 3 4 CHAPTER 1 INTRODUCTION The Infrastructure Needs to 2030/2050 Project brought together experts from the public and private sector to take stock of the long-term opportunities and challenges facing macro gateway and corridor infrastructure (ports, airports, rail corridors, oil and gas pipelines etc.). The intention is to propose a set of policy options to enhance the contribution of these infrastructures to economic and social development at home and abroad in the years to come. Case Studies were undertaken to explore current gateway situations and their outlook and provide a solid basis for the development of policy option. This Case Study focuses in large measure on the future opportunities and challenges facing ports in the Mumbai gateway area, which was chosen as a principal target, following discussions with infrastructure experts in India. The Mumbai Gateway Area encompasses the Mumbai and Jawaharlal Nehru (JPNT) Ports, the Mumbai International Airport, the linkages from these important gateways to the City of Mumbai and surrounding regions and their linkages via inland connections to the widely spread hinterland served by these gateways. Approach Each Case Study was asked to address a common set of generic questions aimed at highlighting the short, medium and longer-term infrastructure-related “challenges and opportunities” facing the individual gateway ports and airports and their intermodal and inland connections. Where funding was available, Case Studies included Workshops organised by the hosts that were intended to generate the background information needed. They also facilitated the provision of advice by experts on the ground and allowed in-depth discussion of the “challenges and opportunities” facing the Gateway area. Background information on the national context and the gateway area was important for all the case studies and this one was no exception. Input was also needed from experts on the ground to be able to answer the generic questions on “Challenges and Opportunities”. The Mumbai Gateway Area Case Study was undertaken “offline” with the assistance of exchanges between the OECD International Futures Programme (IFP) project team, the Overseas Infrastructure Alliance (OIA) working group and through them a number of organisations and experts in India. The OECD IFP project team first drafted the Case Study papers and concentrated on the Mumbai Gateway Area ports and their inland connections. OIA representatives of the Steering Group sought out and provided updates on the Mumbai ports and also assembled and provided material on several private sector ports, principally on the west coast 5 The Opportunities and Challenges paper includes responses to the Generic list of Questions on “Challenges and Opportunities” prepared by the OECD project team, taking into account material in the published reports consulted and with the assistance of inputs provided by the OIA Working Group. Structure of the Case Study Report The general structure of the report is as follows: Chapter 2: provides a short Overview of Indian ports and port handling. Chapter 3: covers the Mumbai Gateway area and its situation. Chapter 4: deals with Hinterland connections Chapter 5: provides advice on the longer term outlook for ports and their growth potential. Chapter 6: Opportunities and challenges facing the Mumbai Gateway Area Chapter 7: Funding ports in India Chapter 8: Opportunities for India’s Major and Non-Major Ports The material presented is mostly drawn from authoritative sources, such as the websites of the different INDIAN Transport Ministries, the Infrastructure website of the Indian Planning Commission and important transport sector documentation such as India’s National Transport Development Plan (Port Sector) and research reports of rating agencies (ICRA, the Indian affiliate of Moody’s and CRISIL, the Indian affiliate of S & P). Background Document A separate Background Document has also been prepared with the assistance of material provided by the Overseas Infrastructure Alliance (OIA) India, providing broader insights for Indian growth and transport demand. 6 CHAPTER 2 OVERVIEW OF INDIAN PORTS AND KEY TRENDS IN PORT HANDLING Overview of Indian Ports India is naturally endowed with a long coastline spanning 7 517 km. The ports sector in India is divided into “Major Ports” and “Non-Major Ports” (minor) ports which are under the jurisdiction of Central Government and State Governments respectively. The legal framework governing the sector comprises the Indian Ports Act of 1908 and the Major Port Trusts Act of 1963. Major Ports which under Central jurisdiction are governed by policy and directives of the Ministry of Shipping of the Government of India. Minor Ports are under the State Governments’ jurisdiction and are governed by policy and directives of respective State Governments’ nodal departments/agencies. India has 12 major ports (the thirteenth one has been announced to be in Port Blair, Andaman & Nicobar Islands, Indian Ocean) and around 200 non-major ports (including minor, intermediate and captive ports) are located across nine maritime States. Of the non-major ports, around 66 are partly or fully operational and these are mainly in the States of Gujarat, Andhra Pradesh, Goa, and Maharashtra. Most of the major ports (except Ennore, which is a corporation owned by the Government of India and Chennai Port Trust) are trusts while the minor ports are corporate entities, generally special purpose vehicles (SPVs). A map showing the Maritime States of India, the major Ports and a number of the other Ports of India is set out below: 7 Figure 2.1. Map of maritime states and ports of India Key trends and outlook Past trends in cargo growth – robust except in 2008-09 According to the Report of the Ministry of Shipping, released in December 2010, the capacity of major ports has increased from 574.77 million tonnes as on 31 March, 2009 to 616.73 million tonnes as on 31 March, 2010. During the year 2009-2010, 13 PPP projects were awarded at the major ports envisaging an amount of Rs. 2653.77 billion and a capacity of 65.65 MTPA. In addition, six PPP projects have so far been awarded in the current financial year, since April till December 2010. The year also saw the trend of non-major ports getting closer to major ports in capacities and cargo handling. The Mundra Port in Gujarat has recently commissioned three berths having a combined 60 million tonnes capacity (or 100 000 tonnes per day) for coal handling. As the country’s shipping tonnage crossed the ten million GT mark, the demand on capacities of ports is likely to increase further with economic growth. A major development during the year, which will boost coastal shipping, is the implementation of River-Sea Regulation. The Coastal Shipping Policy is under preparation by the Shipping Directorate of the Ministry. The Policy will lay rules on cabotage and first right of refusal and implement various recommendations. 8 Outlook favourable for medium to long term Cargo traffic at Indian ports reported a compounded annual growth rate (CAGR) of ten per cent from 579 million metric tonnes (mmt) in 2005-06 to around 846 mmt in 2009-2010, being driven by the growth in GDP and in trading activities (exports and imports). Traffic flows posted a CAGR of 16% over the period 2005-06 to 2009-2010 at non-major ports and of 7% at the major ports (the lower growth rate of the latter is on account of a larger base). After being on a consistently upward trajectory with Year-on-Year (yoy) growth in the range of 10-12%, fiscal 2008-09 proved weak for the port sector with cargo volumes growing by a meagre one per cent because of the overall weak macroeconomic environment, global recessionary conditions, and fall in trade activity and cargo movement. While the major ports were able to post a two per cent yoy growth in 2008-09, cargo volumes at the non-major ports dipped 1% yoy that year. However, in 2009-2010, volume growth has recovered following a pickup in economic activity and a reported 15% yoy increase over 2008-09 with cargo volumes up by a substantial 41% yoy at the non-major ports and by a 6% yoy at the major ports. In 2009-2010, the major ports accounted for 66% of the total cargo handled and the non-major ports for the rest 34% (the latter’s share being on a consistently upward trend).