‘We have taken major steps to enable port-led socio-economic development’

‘We have taken major steps to enable port-led socio-economic development’

By OUR CORRESPONDENT | GANDHINAGAR | 5 June, 2016
The major share in the ‘Indian bunker market’ is taken up by the Mundra Port.
Gujarat Maritime Board CEO says that visionary leadership, stable governance, a supportive regulatory framework and other factors have led to Gujarat being the best state vis-à-vis port-led development in India.

In an exclusive interview to The Sunday Guardian, A.K. Rakesh, Vice-Chairman and Chief Executive Officer of the Gujarat Maritime Board of the Government of Gujarat, spoke his mind on a variety of issues. Excerpts:

Q. The Government of Gujarat has already given an in-principle approval for the establishment of India’s second maritime university. When is the first course from the new university likely to be rolled out and, unlike the existing Indian Maritime University, what will be the main focus of the Gujarat Maritime University?

A. The majority of the programs offered by Indian maritime education institutes cater to the technical job roles in the industry (deck officers and marine engineers). Very few institutes offer programs catering to the commercial needs of the industry. This has resulted in a high demand-supply gap of manpower in commercial areas in the maritime sector in India.

Leading global maritime education institutes, on the other hand, offer programs focused on both technical and commercial disciplines.

The Gujarat Maritime University would offer programs that cater to the education and training needs of the manpower in the commercial areas of the maritime sector. A two-phase launch plan, with each phase of six years, has been developed for the University. In Phase 1, School of Maritime Management, School of Maritime Law, Policy and Administration, Center of Continuing Education and Center of Executive Education are proposed to be launched and in Phase 2, School of Marine Technology, School of Liberal Arts and Social Sciences, Center of Faculty development are proposed to be launched. During Phase 1, the University would offer programs focused on commercial aspects of the maritime industry such as logistics, law, maritime management, shipping trade and finance, etc. Programs for working professionals are also proposed to be launched in Phase 1. In Phase 2, the University would offer program on technical disciplines such marine engineering and nautical science and it would also diversify into liberal arts and social sciences.

The need for a University focused on commercial aspects was also emphasised by key stakeholders of the industry during a stakeholders workshop organised in October 2015 in Mumbai as part of the feasibility study conducted.

The University plans to commence Phase 1 in the academic year 2017-18.

Q. Will the proposed Gujarat Maritime University have any tie-ups with any university abroad?

A. Collaboration with leading international maritime educational institutes is an integral part of the Gujarat Maritime University’s plan to achieve academic and research excellence. GPIDCL signed memorandum of understanding with Global MET Support Center of Korea Maritime & Ocean University, South Korea and Plymouth University, United Kingdom, in 2014 for the proposed Maritime University to establish programs of exchange and collaboration in areas of mutual interest towards the establishment and operation of a successful Gujarat Maritime University. Recently, Southampton Solent University, UK, has also expressed an interest to sign an MoU with Gujarat Maritime University. A due-diligence process is currently being carried out. An MoU would soon be signed with the Southampton Solent University, after the due-diligence process is over.

Q. According to the Ministry of Shipping, the first ever Maritime India Summit held recently in Mumbai, was a huge success, and was able to attract investment proposals worth around Rs 82,905 crore ($ 12.5 Billion), and Gujarat reportedly received investment proposals worth Rs 35,000 crore for port projects from various companies on the first day of the Summit itself. Apart from investments, the Summit played a key role in highlighting the role of port-led development for faster and sustainable economic growth. What has been the Gujarat Maritime Board’s contribution regarding this aspect of port-led growth?

A. Gujarat has always been the frontrunner in the development of ports and the maritime industry. Along with promoting innovative business models for port development, the state government has also supported the sector through conducive policy framework, connectivity to ports and supporting infrastructure.

Gujarat’s 1,600 km long coast is dotted with 47 ports (one major port and 46 non-major ports), which together account for about 41% (2014-15) of India’s total port cargo handling. It gives me great pleasure to inform you that only non-major ports in Gujarat handled 340 MMT of cargo in the recently concluded year (2015-16).

Private ports have played a major role in spearheading Gujarat’s port-led development. Gujarat Maritime Board (GMB), the first maritime board of the country established in 1982, has been the catalyst for encouraging the private sector to invest in Gujarat’s maritime industry. Through the first Port Policy of the country (1995), we have opened up the gateway to privatisation for ports in Gujarat.

But Gujarat’s maritime sector is not just about ports. The state also accounts for about 89% share of the Indian shipbuilding order book, and about 30% share in global ship breaking and recycling. The state possesses 15 MMTPA LNG cargo handling capacity, along with major port-based manufacturing hubs such as Kandla Port SEZ, Mundra SEZ and Petrochemicals Investment Region (PCPIR).

Another crucial aspect of Gujarat’s port-led development has been a continued focus on development of strategic as well as softer segments of the maritime industry. GMB, via its subsidiary Gujarat Ports Infrastructure & Development Co. Ltd. (GPIDCL), is engaged in developing a Gujarat Maritime University, as well as India’s first dedicated Maritime Cluster in Gujarat. Other projects, which are in various phases of development include: Ro-Ro and Ro-Pax Ferry Services, Integrated Port Management System (IPMS), Marine Shipbuilding Parks, Floating Storage & Regasification Unit (FSRU) LNG Terminal; and Marine Bunkering Terminal.

The recent investment/ collaboration proposals which we have received at the Maritime India Summit 2016 is a proud testimony to the continued faith of investors in Gujarat’s maritime potential. These proposals have been received across wide domains such as port expansion, LNG terminal development and maritime education. You may appreciate that we have created a right kind of business ecosystem in Gujarat, and our partners have leveraged it as optimally as possible. Industry and business, in turn, lead to creation of more jobs and a rise in the quality of life. I am proud to say that Government of Gujarat has realised this and we have taken major steps to enable port-led socio-economic development in our state.

Thus, a conglomeration of factors such as visionary leadership, stable governance, supportive regulatory framework, ease of doing business, robust infrastructure, confidence of investors and collective dedication of all stakeholders have all contributed together to Gujarat being the numero uno state vis-à-vis port-led development in India.

Q. Following the inauguration of the Maritime India Summit by Prime Minister Narendra Modi, Gujarat Chief Minister Anandiben Patel hosted an interactive session with leaders from the Indian maritime industry on their plans for the state and assistance required from the Gujarat government. Can you discuss some of the ideas that emerged at the interactive session?

A. As part of Gujarat’s industry engagement strategy, Chief Minister Anandiben Patelji had hosted this interactive session on the sidelines of Maritime India Summit 2016. The dialogue was part of a series of such senior level meetings that the Chief Minister has hosted in recent times. Such sessions are aimed at providing a direct channel to industrialists for raising any possible business concerns with the topmost decision-making authority in the state.

Individual meetings were held with senior management from organisations such as Reliance Industries Ltd. (RIL), A.P. Moller Maersk, IL&FS, Shapoorji Pallonji Group and Swan Energy. While expansion plans were discussed with organisations such as RIL and Maersk; representatives of Shapoorji Pallonji and Swan Energy briefed the Chief Minister about the progress of their prominent green-field projects in Gujarat. IL&FS representatives primarily discussed their plans for participating in the upcoming Gujarat Maritime Cluster.

RIL is developing its sixth oil handling berth at Sikka at a planned investment of Rs 700 crore. A MoU in this regard was also signed by us with RIL during the summit. Maersk, which operates Pipavav port through subsidiary company APM Terminals, discussed their plans for establishing sea-plane services between Pipavav and Mumbai.

Shapoorji Pallonji Group promoted Simar Port Pvt. Ltd. (SPPL) is constructing a green-field port at Chhara with a planned capacity of 10 MMTPA. SPPL has also proposed to develop a LNG terminal in association with Hindustan Petroleum Corp. Ltd. at Chhara. Progress on port development, as well as matters related to issuance of the LOI vis-à-vis LNG terminal development were discussed during their interaction. Swan Energy is developing India’s first Floating Storage and Regasification Unit or Floating LNG Terminal at Jafrabad, and plans to invest Rs 6,000 crore in Gujarat for the project. Their representatives explained how the futuristic terminal would boost India’s LNG import supply chain in times to come.

IL&FS, which is already a major participant in the ambitious GIFT City project of the Government of Gujarat, has also expressed interest in partnering with the state’s initiative of developing a commercial services maritime cluster in the state. The maritime cluster seeks to promote clustered development of commercial maritime services such as chartering, broking, financing, maritime law and so on. Gujarat Ports Infrastructure & Development Co. Ltd. (GPIDCL), a subsidiary of GMB, has identified GIFT City as one of the probable locations for developing the cluster, and IL&FS is keen to provide infrastructural support for the cluster development project.

Yaduvendra Mathur, CMD, EXIM Bank of India, also represented the Gujarat delegation during the interactive session. He presented ways in which favourable finance could be provided by EXIM Bank to maritime industry players wishing to invest or expand operations in Gujarat. Issues with obtaining favourable, low cost, long term financing commonly plague the Indian maritime market, and such a proactive initiative by EXIM Bank to venture into this business is surely appreciable.

Q. According to available data, Gujarat roughly commands a 22% share among Indian states in coastal shipping, and is actively working on more initiatives to maintain its leadership position in coastal shipping of commodities. How is the Gujarat Maritime Board contributing to maintaining the state’s leadership position in coastal shipping of commodities?

A. With a view to increase cargo/passenger movement through coastal routes, the state government has prepared a feasibility report identifying five potential locations for the development of Ro-Ro Ferry Services in Gulf of Khambhat. The five identified locations are Gogha, Dahej, Suvali (Hazira), Jafrabad and Pipavav. Currently, a pilot project between Dahej and Gogha is under implementation. The project, when operational, will result in definite increase in coastal traffic.

The Gujarat Maritime Board gives 20-25% concession in wharfage to coastal vessels in order to promote coastal shipping. GMB’s tariffs for port dues, mooring, berth-hire, pilotage, etc. are also charged at concessional rates for coastal vessels. The GMB has also engaged CRISIL as a consultant to estimate coastal cargo potential for Gujarat as a whole and facilitate to improve its share further in coastal traffic within the country.

Q. There were reports last year that the Gujarat Maritime Board plans to integrate various maritime policies into one comprehensive port policy. What has been the progress in this regard?

A. Gujarat being India’s pioneer maritime state, launched the country’s first port policy in 1995. The policy gave thrust to developing Greenfield ports by inviting participation from private players. Gujarat has many large industries that contribute to port traffic like petrochemicals, chemicals, pharmaceuticals, steel, cement and textile.

Considering rapid industrialisation and maritime activities being undertaken nationally and globally, the Gujarat Maritime Board is now considering revising its port policy and formulating an integrated policy for maritime sector development.The new policy is planned to include ship-building, maritime cluster development and ship recycling; and will be in sync with the industrial development. The first policy announced in 1995 had laid the framework for private sector investment in the port sector and this action of the government ensured development of maritime masterpieces in the country.

The GMB has accelerated the institutionalisation of one comprehensive port policy by approving the formation of a task force to formulate such a policy. GMB is focusing specially on maintaining the basic features of the existing policy while making subtle changes. We thus believe that a new comprehensive port policy would provide a much needed thrust to our maritime industry, in the wake of current global trends and market scenarios. I am sure you will hear more on this from us soon.

Q. Can you discuss some of the untapped investment opportunities in India’s maritime sector, and how the Gujarat Maritime Board proposes to take advantage of such opportunities?

A. Currently, the annual bunker off-take in Indian ports is around 1-2 MMT. Bunkering services for international ships are available in all the major ports of India. The major share in the Indian bunker market is taken up by Mundra port in Gujarat. The other emerging bunker locations are Mumbai and JNPT, Cochin, Kandla, Vishakhapatnam, Goa, and Haldia. Though bunkering services are available at most major ports in India, the corresponding infrastructure has not been developed in tune with the increasing requirements of the shipping industry. GMB is planning to set-up a bunkering terminal at Piram Island to take advantage of this unique opportunity.  Piram is an island strategically located within the Gulf of Khambhat and can cater to bunkering requirements on traffic arriving at both the coasts of Gulf. Further, it can also cater to traffic calling at ports of Maharashtra.

There is an untapped potential with regards to passenger movement through sea routes. With this in mind, GMB is planning to start Ro-Ro ferry services between Dahej and Ghogha. This service, once operational, is expected to reduce travel time of 6-7 hours to 45 mins to 1 hour. Further, the GMB also plans to start similar services at Suvali (Hazira), Jafrabad and Pipavav in future.

The port sector is also exploring the possibility of starting sea-plane services along its coastline and connecting Mumbai and Pipavav port. If found feasible, GMB would also facilitate such connectivity between other GMB ports and important business destinations.

Currently, the GMB is also exploring the possibility of collaborating with the Tourism department to synergistically develop marine tourism in Gujarat.

With India’s plans to develop Chabahar port in Iran, the natural gas imports to India are bound to increase. Gujarat is facilitating the development of FSRUs and LNG terminals over Gujarat’s coast line.

There is a huge potential for development of ancillary industries that support shipbuilding sector. The GMB has plans to set up marine shipbuilding parks to facilitate the growth of shipbuilding industry by providing conducive ecosystem of infrastructure, skilled manpower and land area.

Q. What has been the Gujarat Maritime Board’s contribution regarding ensuring and enhancing coastal security aspects, considering that Gujarat is strategically located with 1,600 kms of coastline, the longest among the maritime state of India, and is the nearest maritime outlet to the Middle East, Africa, and Europe?

A. The Gujarat Maritime Board being conservator of coastline, has implemented VTMS (Vessel Traffic Monitoring System) in the Gulf of Khambhat. It is India’s first privately-owned and operated VTMS system. GMB along with Directorate General of Lighthouse and Lightships and Kandla Port Trust have jointly implemented VTMS for the Gulf of Kutch in Feburary 2012.

The GMB has recommended that one full State Reserve Police (SRP) battalion should be raised through Director General of Police for enhancing security at its ports. GMB proactively monitors the compliance of International Ship and Port Facility Security (ISPS) Code for important ports and in view of this, GMB has made the Integrated Security Management System (iSMS) a part of its ambitious IPMS (Integrated Port Management System) Project. The Integrated Security Management System (iSMS) shall handle security related sub-systems such as the Security Management (e.g. Video Surveillance, Access Control, and Information Security), Disaster Management, & Environment Management considering the requirement of International Ship and Port Facility Security (ISPS) Code.

Besides these, GMB is working closely with the Marine Police, Coast Guard and Indian Navy by providing them with adequate infrastructure such as space to set up marine police stations over its ports, berths for berthing of coast guard vessels as well as continuously sharing data feed received from VTMS to the Indian Navy.

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