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Captive jetties flock to handle  more cargo as Gujarat tweaks port policy

Wednesday, 12 February 2020 | 00:00

Within months of the Gujarat government allowing captive jetties to handle third-party cargo without its permission, eight out of 33 captive jetties in the state have applied for the benefit, a state government official said.

The policy change, announced by the Gujarat Maritime Board (GMB) in October 2019, allows these jetties to handle third-party cargo after signing a one-time supplementary agreement.

“The window for opting in for the supplementary agreement is open till March 31,” the official said on condition of anonymity. “So far, 8 captive jetties have opted in. The policy is meant to attract more coastal cargo and to cut logistics costs for customers by half. Gujarat has idle cargo-handling capacity of about 100 million tonnes per annum (mtpa) at these captive jetties which can now be fully used,” he added.

According to the official, applications were received from Gujarat State Fertilizer Corp.; Shree Digvijay Cement Ltd; Birla Copper (registered as Dahej Harbour Infrastructure Ltd); ISGEC Heavy Engineering; HPCL-Mittal Energy Ltd which operates a refinery and has in-principle approval for a captive jetty; and Essar Bulk Terminal Ltd’s two jetties at Hazira and one at Salaya.

Gujarat has a 1,600 km-coastline with four private ports and 33 captive jetties. The ports handle about 46% of the state’s cargo while the jetties handle 45%, according to the preamble of the new port policy.

The preamble expects investment of ₹4000 crore to flow into the state once the jetty owners expand their capabilities. In order not to undercut commercial ports, the policy imposes an additional 50% in wharfage charges for customers using captive jetties.

While the Essar group confirmed that it has applied for the supplementary agreement, the others did not respond to requests for comment. Jagannarayan Padmanabhan, practice leader and director – transport and logistics, Crisil Ltd, said that with investors lukewarm towards building new ports, what Gujarat has done is an innovative way to sweat existing assets by allowing captive jetties to handle up to 100% more third-party cargo now.

“For customers, this means they are no longer overly reliant on any one particular operator and owners of captive jetties can earn additional revenue with their spare capacities. For the government, this translates to increased royalties and better logistics within the state which will attract more investment. I think the cargo that will be handled (through this route) will be mostly bulk or break-bulk while incumbent port operators will continue to handle all the container cargo,” Padmanabhan said.
Source: Live Mint

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