Making of a mega terminal

In two months from now, Mumbai will be less about the super tall tinted skyscrapers or the 16-car new bullet train that has more recently invaded the minds of its people. These will be dwarfed by a new outer borough landmark which carries the card of being India’s largest container terminal.

This sea-side project has been a head turner ever since it was awarded for development to the global port group Port of Singapore Authority in 2014. For various reasons. The Jawaharlal Nehru Port Trust, India’s largest container port had to call for a re-bid after the first call ended in a limbo when a few consortia were barred from bidding and the one that won the bid broke up and backed out. However, within a very short period, PSA won the concession to build the terminal by promising to share a part of its earnings as royalty to the government, which will own the facility.

What has been a talking point among the business and bureaucratic circles is the concessionaire’s promise of commencing the first phase of the project by December 2018. The new terminal’s first phase includes a berth line of 1,000 meters (3,281 feet) and a capacity of 2.4 million teu per year, and at full build-out, it will have a 6,562-foot quay, a 494-acre storage yard, 24 quay cranes, and an annual capacity of 4.8 million teu when the second phase too is completed by 2021. PSA officials spoke of this staggered plan for commissioning the project to help ease the flow of traffic to the other three terminals that make this port work at an efficiency level of more than 100 percent most times. The project to build a terminal to handle five million teu of cargo has been one of the biggest talking points because of its sheer size and work involved in getting such a mega infrastructure project work. Senior officials monitoring the project tell us that with some maintenance dredging and a few fixes, “we will be comfortably meeting our internal deadlines.” There’s both delight and dismay in his voice when he says this. Delight because the entire sea side story will be in place with much of the yard equipment ready to handle cargo at the three berths that will be operational. What’s causing the worry lines is the dysfunctional stretch just outside the port that threatens to derail this project. Quite literally so. A patch of 432 metres of land to connect the terminal’s rail services to the main line is what is causing an itch. A culvert needs to be built over an ONGC pipeline that passes along this stretch and Railways has not signed off for this construction. This bureau- cratic delay has stalled the railway connectivity and could possibly push all the cargo making its way in and out of this terminal on to the roads. With the Dedicated Freight Corridor still remaining only a perfect plan on paper, the absence of rail connectivity could cause blockage, adding to the cascading congestion woes of the port. The Western Dedicated Freight Corridor (DFC) was supposed to be up before the 4th terminal commences operations because of its ability to carry cargo from across seven states originating from Dadri Dry Port (near Delhi) and terminating at the Jawaharlal Nehru Sea Port.

 Given that the railway line is threatening to go off track, one would perhaps say their prayers for the road network to be in place. Unfortunately, it is still an unanswered prayer. The Port Trust that has undertaken the task of widening the existing roadways to six and eight lanes still largely remains underway. The construction of a grid separator to streamline traffic to different western and north-bound location will not be ready before September 2018, they say. But for any truck movement out of the terminal, a connecting road has to be laid between the terminal and the main trunk lane. Given the tardy progress made by the government in implementing its own projects, it has now asked the concessionaire to complete laying the connecting stretch.

Rail and road connectivity are the heart and soul of any port project. The absence of a strong last mile connecting network could cripple landside operations. PSA, on its part, has made several representations to the government through delegations and association of private ports and terminals. But to its chagrin, no help has come yet. IPPTA frowns on this development as it calls the execution of the fourth terminal a ‘collective responsibility of all stakeholders involved’. “Private terminals are awarded such mega infrastructure projects for the speed of delivery, fast decision making and efficient operations. If the landlord port and the government do not step up to facilitate this project, it will reflect poorly on the success of the PPP model of awarding contracts,” an association official said. An international consultant on ports said that Port trust will have to work more aggressively to ensure cooperation from all quarters maneuvering and accommodating the interests of all concerned to take the project to completion.

A spokesperson of the Container Shipping Lines Association attested to the government’s need to step up and use its goodwill with the administrative departments to make this two kilometer linear jetty a reality. “The government should not treat this as any other BOT project. If the rail and road connectivity does not fall in to place, it is the Indian tradesmen who will be at a loss,” he said. The commencement of this terminal has been awaited by the entire trade fraternity, mainly the shippers. Transporters and shippers are of the view that evacuation mechanisms have to be in place much before the project commences so that importers and exporters don’t face delayed cargo delivery. Any cost levied outside the port walls is borne by the shipper and a delay in trucking time only aggravates his woes.

To ensure such mega projects are implemented on time, the government should arrest the working of departments in silos. It is incumbent on the Port Trust as well to create an environment where the entire spectrum of service providers works in tandem with each other. Ease of doing business, until then, will remain a longstanding dream. An industry professional recalls a pertinent observation made by global tax and consulting firm Deloitte about seven years ago. In its feedback on India’s method of rewarding infrastructure projects, the report published remarked that there was fundamental flaw in the manner of awarding the contract. The government or any institution commissioning a project must award the project to a company that is reputed for its quality of service, cost efficiency and timeliness in meeting deadline than on the basis of revenue share. Such a model will encourage a bidder to complete a project on time instead of working to maximise his revenue share. The PSA fourth terminal was given to the Singapore firm for willing to part with more than a third of its revenues as royalty to the government. But luckily for PSA, its concession agreement was drafted under the revised TAMP guidelines in 2013 that allows for an increase in tariff commensurate with the economic environment and the performance of the terminal operator. It is here that PSA stands at an advantage over the other three terminal operators. Other reasons cited were initiating the project on a post-facto basis where infrastructure is created when demand overtakes supply than the other favourable situation of creating supply to stay ahead of demand.

 With just a couple of clearances pending, PSA is inching closer to completing the first phase of the project in a seemingly short deadline given to the group to commence work on this mammoth project.