MINISTRY OF SHIPPING, ROAD TRANSPORT & HIGHWAYS
*******
BACKGROUND NOTE
SHIPPING SECTOR
Shipping plays an important role in the transport sector of India’s economy.
Approximately, 90 % of the country’s trade volume (70 % in terms of value) is moved by sea.
India has one of the largest merchant shipping fleet among the developing countries and is ranked
17th in the world. Indian maritime sector facilitates not only transportation of national and
international cargoes but also provides a variety of other services such as cargo handling services,
shipbuilding and ship repairing, freight forwarding, light house facilities, training of marine
personnel, etc. As on 1.10.2005 India has 704 ships with 8.31 million Gross Tonnage (GT) and
13.73 million Dead Weight Tonnage (DWT).
Coastal Shipping
Coastal shipping is an energy efficient, environmental friendly and economical mode of
transport in the Indian transport network and a crucial component for the development of domestic
industry and trade. India’s Coastal Shipping Tonnage as on 1.10.2005 was 463 vessels with 0.82
million G.T. and 0.86 million D.W.T.
Fiscal Regime
Government has rationalized the fiscal regime for Indian Shipping Industry by introducing
Tonnage Tax system from this financial year 2004-05, in order to provide Indian Shipping industry
a level playing field vis-à-vis International shipping companies and also facilitate the growth of
Indian tonnage. This was a long pending demand of the Shipping Industry.
As a result of introduction of Tonnage tax regime and also due to current shipping boom,
Indian Tonnage has steadily grown in the last six months. Indian tonnage as on 1.6.2004 was 7.05
million Gross Tonnage(GT) which has increased to 8.31 million
GT as on 1.10.2005.
Maritime Training
Government is responsible for creation of the trained manpower required for the merchant
navy fleet of the country. This national obligation is being met through the Government training
institutes and number of other approved training institutes in private sector. The training institutes
established by the Government are: Training Ship ‘Chanakya’; Marine Engineering and Research
Institute (MERI), Kolkata; Marine Engineering & Research Institute (MERI), Mumbai; LBS
College of Advance Maritime Studies & Research, Mumbai. In addition to the above, there are
about 128 training institutes in the private sector approved by the Director General of Shipping,
imparting pre-sea and post-sea training in various disciplines.
PUBLIC SECTOR UNDERTAKINGS
1. Shipping Corporation of India Ltd.
SCI has a fleet of 84 vessels (as on 1/10/2005) aggregating to about 2.7 million GT (4.5
million DWT) comprising general cargo vessels, cellular container vessels, crude oil tankers
(including combination carriers), product tankers, bulk carriers, LPG/Ammonia carriers, acid
carriers, passenger vessels and offshore supply vessels.
1
Two Joint Venture Companies (JVCs) have been formed at Malta viz. India LNG
Transport Co. No.1 & No.2 Ltd. for construction, ownership and operation of two LNG tankers
which are on time charter to Petronet LNG Ltd. for a period of about 24 years. The SCI and Mitsui
OSK Line (MOL) have 29.08% stake each in the consortium; the remaining 41.84% being shared
by NYK (17.89%) and K Line (8.95%) and Qatar Shipping Co. (15%).
SCI also has a joint venture with Islamic Republic of Iran Shipping Lines(IRISL), known
as Irano Hind Shipping Company (IHSC). It has a fleet of 6 ships aggregating to 0.28 million
DWT.
2. Cochin Shipyard Ltd.
Cochin Shipyard Limited (CSL) is designed to construct ships of size up to 1,10,000 DWT
and repair ships up to 1,25,000 DWT. The Yard has constructed and delivered nine large ships
(five Bulk Carriers and four Crude Oil Tankers).besides 36 other vessels The Yard has so far
repaired more than 1000 ships of various types.
3. Hindustan Shipyard Ltd.
The shipbuilding capacity of the Hindustan Shipyard Limited (HSL) is 3.5 pioneer class
vessels of 21,500 DWT each. The maximum size of the vessel that could be built is 50,000 DWT.
HSL has an exclusive offshore platform construction yard capable of constructing tow platforms
per annum. Other infrastructure facilities include engineering shops, cranes and load-out facilities.
HSL has so far constructed and delivered 136 vessels of various types.
4. Hooghly Dock and Port Engineers Ltd.
The Company has two working units in Hawrah District of West Bengal, one at Salkia and
another at Nazirgunge. The installed capacity in shipbuilding is 1,100 tonnes per annum. Apart
from a dry dock and a jetty, it has five slipways .
INLAND WATER TRANSPORT SECTOR:
India has got about 14,500 km of navigable waterways which comprise of rivers, canals,
backwaters, creeks, etc. About 18 million tones of cargo (1.7 billion ton-Km) is being moved
annually by Inland Water Transport (IWT), a fuel-efficient and environment friendly mode. Its
operations are currently restricted to a few stretches in the Ganga-Bhagirathi-Hooghly Rivers, the
Brahmaputra, the Barak River, the rivers in Goa, the backwaters in Kerala and the deltaic regions
of the Godavari-Krishna rivers. Besides the organised operations by mechanized vessels, country
boats of various capacities also operate in various rivers and canals.
?? Inland Waterways Authority of India
The Inland Waterways Authority of India (IWAI) constituted under the Inland
Waterways Authority of India Act, 1985, came into existence on 27 October 1986 for
development and regulation of inland waterways in the country. The Authority undertakes
various schemes for development of IWT related infrastructure on National Waterways.
The head office of the Authority is located at Noida. The Authority also has its regional
offices at Patna, Kolkata, Guwahati and Kochi and sub offices at Allahabad, Varanasi,
Bhagalpur, Farakka and Kollam.
2
?? National Waterways.
The Ganga between Allahabad – Haldia (1620 km) in 1986, the Sadiya-Dhubri
stretch of river Brahmaputra (891 km) and the Kollam-Kottapuram stretch of West Coast
Canal along with Champakara and Udyogmandal Canals (205 km) in Kerala have so far
been declared as National Waterways and are being developed for navigation by Inland
Waterways Authority of India.
Action has already been initiated to declare following inland waterways as national
waterways.
i)
Bhadrachalam- Rajamundry stretch of River Godavari along with WazirabadVijaywada Stretch of River Krishna integrated with Kakinada Canal, Eluru Canal,
Commamur Canal.and Backingham Canal (1095 km of which Backingham Canal
is 443 km)
ii)
Karimganj-Lakhipur Stretch of River Barak.
iii)
Geonkhali- Charbatia stretch of East Coast Canal (ECC) along with CharbatiaDhamra Stretch of Matai river, Talchar Dhamra Stretch of River Brahmani and
Mangalgadi-Paradip Stretch of Mahanadi Delta Rivers (623 kms).
Central Inland Water Transport Corporation
The CIWTC is mainly engaged in transportation of goods by inland waterways in the
Ganga-Bhagirathi-Hooghly, Sunderbans and the Brahmaputra rivers. It is operating regular cargo
services between Kolkata and Pandu (near Guwahati), between Kolkata and Karimganj (Assam),
Kolkata-Bangladesh and between Haldia and Patna
The case of CIWTC was referred to Board for Reconstruction of Public Sector Enterprises
(BRPSE). The BRPSE has since made its recommendations. The recommendations of the BRPSE
are to be placed before the Cabinet for a decision on the future of the CIWTC.
Activities and areas of performance of Shipping Sector during 2004-05 and 2005-06 (till
October, 2005).
Maritime Policy
For the first time, a comprehensive policy for the maritime sector is being formulated. The
policy seeks to combine vision and strategy for the sector through harmonious and coordinated
development of our maritime assets like ports, shipping, inland water transport systems and ship
building and ship repair industries. After Inter-Ministerial consultations and firming up of the
draft policy document, it will be placed before the Cabinet within the next couple of months.
National Maritime Development Programme
The Government has taken up preparation of the National Maritime Development
Programme by identifying specific schemes/projects and other measures which are necessary to
give a concrete shape to the vision and strategy laid down in the Maritime policy document, over a
10 year period.
3
The programme will be implemented through public private partnership and will involve
investment of about Rs.1,00,000 crores in ports sector. Out of this, about Rs.60,000 crores will be
in major ports and the balance in Shipping and Inland Water Transport sectors. Public investment
will be primarily for common user infrastructure facilities in the ports like deepening and
maintenance of port channels, construction of breakwaters, rail and road connectivity from ports to
hinterland etc. Private investment will be in the areas where operations are primarily commercial
in nature like construction, management and operation of berths/terminals in the various ports.
About 275 projects in major ports, to be implemented in two phases have already been identified
for inclusion in Programme which is expected to be finalized soon.
Introduction of Tonnage Tax for Shipping Industry
As stated earlier in this Note, Government has rationalized the fiscal regime for Indian
Shipping Industry by introducing Tonnage Tax system from this financial year 2004-05, in order to
provide Indian Shipping industry a level playing field vis-à-vis International shipping companies
and also facilitate the growth of Indian tonnage.
Job Creation in Maritime Sector
1,29,000 training mandays have been generated since 1.1.2005 which will benefit the
youth looking for jobs in maritime sector.
Substantial incremental tonnage growth
More than Rs.300 crores of incremental Gross Value Addition(GVA) to the Indian
economy has taken place in 18 months by the incremental tonnage growth.
Implementation of ISPS Code
The ISPS Code was introduced as a fall out of 9/11 incident in the US, when the need to
tighten up security for all modes of transport, which can be potential threat to the national
security was realized. Therefore, the 22nd Session of the Assembly of the IMO in
November,2001 unanimously agreed to the development of new measures relating to the
security of ships India is one among the first few countries along with Singapore to complete
implementation of ISPS Code, ensuring that there will be no hindrance in Indian exports and imports.
Record profit earned by Shipping Corporation of India
Shipping Corporation of India (SCI), a Public Sector Undertaking, has registered a profit of
Rs.1419.91 crores during the financial year 2004-05. One LR-I Crude oil Tanker and two Very
Large Crude Carrier (VLCCs) have been inducted in the fleet of SCI in last 1½ years. Acquisition
of two more VLCCs (worth Rs. 1136 crore) has been approved by Government in September,
2005.
LNG Shipping Policy being Considered
Ministry is considering formulation of an LNG shipping policy. It is our experience that unless
support is provided to Indian shipping, the developments of Indian flag in niche area do not happen
automatically e.g. Container Shipping could not take off in India as there was no policy support on
this from the government. In order to develop LNG Tonnage under Indian Flag, Directorate
General (Shipping) issued guidelines for grant of license to LNG vessels on 5th July, 2004.
4
Indian Maritime University(IMU)
Keeping in view India's position as leading merchant navy supplier to global needs and the
stiff challenge faced by India from South Eastern Countries like Philippines, China etc, the Expert
Committee constituted for this purpose has recommended formation of IMU by an Act of
Parliament under the aegis of Ministry of Shipping, Road Transport & Highways. Further action
on this line is on.
Cruise Shipping Policy
The National Cruise Shipping Policy is on the anvil. A High Power Steering Group under the
Chairmanship of Minister of Shipping, Road Transport and Highways with Union Minister of
State for Tourism as Co-Chairperson has been set up. Discussions are underway to finalize this.
A Workshop was also convened in Mumbai in February this year which was attended to by
Members of the Consultative Committee of the Parliament, various stakeholders, hospitality
industry, shipping lines, cruise lines, tour operators and shipping agents.
Ratification of ILO Convention concerning Seafarers' Identity Document
This Convention was ratified on 22.12.04. Ratification of this Convention enables Indian
seafarers, holding a valid Seafarers' Identity Document, to enter or transit those countries which
have ratified this convention without passport/visa.
MoC with USA on Maritime Transport Science & Technology
A Memorandum of Cooperation (MOC) on Maritie Transport Science & Technology was
signed on in April 2005 with the Department of Transportation of the United States of America.
The MOC envisages cooperation and collaboration between the two countries in the fields of
Shipping and intermodal Operations, Maritime Safety and Security,Port Management, Dredging
and Dredger construction, Ship Recycling,Maritime Training and Education, Technological
Developments related to Maritime sector, Inland Water Transport and Other Fields of Mutual
Interest.
Aids to Navigation
Four new Light Houses have been established:
?? Work Order issued for establishment of Vessel Traffic Service for Gulf of Kachch (Gujarat) at a
cost of Rs. 117 crores.
?? 11 RACONS (Radar Beacons) have been established along Indian Coast line in the last
one-year increasing the number of RACON to 41.
?? Automation and remote control of 47 Light Houses in Jamnagar District with 7 Remote
Control Stations have been completed.
Shipbuilding
?? The global shipbuilding sector is in uptrend and all the major shipyards in the world are
fully booked till 2008-09.This favourable scenario has also resulted in good order book
position for Indian shipyards.
?? The order book position of Cochin Shipyard Ltd. (CSL) at present amounts to Rs.953 crore
(including subsidy) which consists of 5 number of Tug boats for M/s. A.A. Turki
Corporation (AATCO)Saudi Arabia, 6 nos. 30,000 DWT Bulk Carriers for M/s. Clipper
5
Group Management Ltd., Bahamas and 4 nos. of Platform Supply Vessels for M/s.
Seatankers Management Co. Ltd., Norway.
?? Hindustan Shipyard Limited (HSL) took advantage of the boom in the Shipbuilding
industry and has entered into a contract in May,2004 with M/s Goodearth Maritime
Limited, Chennai, for construction of 2 Nos. Bulk Carriers at a contract price of US$
35,028,000/-. This was the first major Shipbuilding order secured by HSL after a gap of
more than a decade.
?? Hoogly Dock & Port Engineers Ltd. has also delivered 400 passenger cum 100 ton cargo
vessel “m.v. KALIGHAT” to Andaman and Nicobar Administration in the first week of
April, 2005.
Inland Water Transport
?? Fixed schedule services on NW-1 (between Haldia and Patna) which began in
January,2004 are continuing.
?? 7 terminals on NW3 (Rs. 10.32 crore) commissioned.
?? Permanent Terminal at Patna (Cost Rs. 25 crore) almost complete.
?? Permanent Terminal at Pandu, Guwahati(Cost Rs. 30 crore) to be completed by March
2006.Two cargo vessels (cost Rs. 2.7 crore each) and two container cranes(Rs. 5.8 crore)
added.
?? POL tanker 300 tonnes (Rs. 2.80 crore) to be delivered next month.
?? Construction of High Level jetty at Patna awarded to CPWD in August 2005 at a cost of
Rs. 13.7 crore
?? Container cargo vessel 300 MT (delivery in November 05) at a cost of Rs. 2.74 crore.
?? One Hydraulic Surface Dredger for NW – 2 at a cost of Rs. 5.5 crore
(delivery by December 2005)
?? 4 nos. Shore Mobile cranes acquired for NW-1 &2 at cost of Rs. 2.4 crore
?? Acquisition of 5 nos. crane pontoon is expected by December 2005 at a cost of Rs. 7 crore.
?? Total investment in IWT by IWAI Rs.74 crore in 2004-05.
?? Three new declarations in pipeline - NW4, NW5 and NW 6.
Tsunami Disaster- Relief Measures:
The Tsunami waves had extensively damaged the Port facilities and vessels of the Andaman &
Nicobar Administration. In order to cope up with the situation, the Ministry immediately took steps
for acquisition of several vessels. 5 Survey teams from Minor Ports Survey organizations were
engaged to carry out survey works; and Special voyages were arranged through Shipping Corporation
of India for carrying relief material to the Islands and the sailing schedule of various vessels were
closely monitored.
Allocation of funds to the tune of Rs. 1752.99 crores for repair/restoration/replacement of
Port and Shipping Infrastructure damaged during Tsunami has been forwarded to Planning
Commission etc. Pending allocation, Deptt. of Shipping sanctioned Rs. 2.85 crores from RE 200405 for Tsunami works in 2004-05 and so far Rs. 6.34 crores have been sanctioned for 12 projects
from budget allocation of Rs 35 crores (for other plan works in 2005-06) for Tsunami works.
6
PORT SECTOR
Introduction
There are 12 Major Ports in the country at Kolkata/Haldia, Mumbai, Jawaharlal Nehru Port
at Nhava Sheva, Chennai, Cochin, Visakhapatnam, Kandla, Monnugao, Paradip, New Mangalore,
Tuticorin and Ennore. In addition, there are about 187 minor and inter-mediate ports located along
the 7517 kms. of coast line of India (including the coastlines of Andaman, Nicobar and
Lakshadweep Islands). These ports serve not only as transshipment points for trade but also act as
regions of economic activity in their surroundings and hinterland. The major ports are under the
control of the Central Government while the minor/intemediate ports are under the overall
jurisdiction of the respective States. Out of the 12 major ports, 11 major ports are managed through
respective Port Trust Boards constituted under Major Port Trusts Act, 1963 and one major port at
Ennore near Chennai has been incorporated as a company under the Indian Companies Act. About
95% by volume and 70% by value of India's global merchandise trade passed through Indian ,
ports. The major ports handle about 75% of the all- India port throughput and thus bear the brunt
of sea-borne trade. Port facilities have also been provided at Andeman and Nicobar Islands and
Lakshadweep by Andaman Lakshadweep Harbour Works (ALHW) under the Central Government.
The overall requirement of funds for the port sector during the 10th Plan period (2002-07)
is expected to be around Rs. 16675 crores. Out of this amount Rs. 5418 crores is envisaged
through public funding and Rs 11257 crores through private investment. The preferred route for
private sector participation is through open competitive bidding in which the bidder offering the
highest percentage of revenue share out of the operation of the facility which is licensed out is
selected. Tariff Authority for Major Ports (TAMP) which is an independent statutory authority
fixes the tariff to be charged from the port users. This tariffs act as ceilings.
The Government has issued comprehensive guidelines for private sector participation in
major ports. These guidelines lay down the areas of private sector participation, qualification
criteria for participation, bidding procedures, method of selection and also prescribe model
documents for making the projects attractive for private sector investment. Till date 17 private
sector projects involving investment of about Rs.6130.20 crores have been approved out of which
13 have already been operationalized. For 21 other projects involving investment of about
Rs.4517.30 crores, bids are either under consideration or have been invited.
During 2004-05, the major ports handled aggregate traffic of 383.77 million tonnes
as against 344.55 million tonnes in 2003-04. For the six month period from April – October, 2005,
the major ports have handled 234.58 million tonnes as against 209.96 million tonnes during the
corresponding period in 2004.
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International Container Transhipment Terminal at Cochin Port
Licence Agreement for development of International Container Transhipment Terminal at
Cochin Port on Build Operate and Transfer (BOT) basis was been signed between Cochin Port
Trust and India Gateway Terminal Private Limited, 100% subsidiary of Dubai Ports International
on 31st January, 2005. The estimated investment by the BOT operator is 2118 crores. The
agreement envisages that initially DPI will take over Rajiv Gandhi Container Terminal (RGCT),
which is already under operation from Cochin Port Trust and thereafter will migrate to ICTT on its
becoming operational. The Port Trust will provide road and rail connectivity to the ICTT site.
Ministry of Commerce & Industry has already agreed to declare the ICTT site as Special
Economic Zone (SEZ). On completion, the terminal will have capacity to handle 3 million Twenty
Feet Equivalent Units (TEUs) of container cargo per annum. It will be able to handle large ships
of size 8,000+ TEUs. Hon’ble Prime Minister laid the foundation stone for the project on
16.2.2005. Cochin Port Trust has already handed over RGCT to the BOT operator on 1.4.2005.
The Department of Shipping is closely monitoring the progress of various activities connected with
implementation of the project so as to ensure that the timeframes set out in the License Agreement
are adhere to.
Sethusamudram Ship Channel Project
The Sethusamudram Ship Channel Project envisages cutting of a channel to connect the
Gulf of Mannar and Palk Bay so that ships moving between east and west coast of India could
have a continuous navigable sea route within India’s own territorial waters. This project will fulfill
150 years’ old dream of the people of Tamil Nadu in particular and the peninsular India in general.
The total project cost is Rs.2427.40 crores. So far, Central Government has invested Rs.51
crores and the other joint venture partners have contributed Rs.37 crores.
The total length of the channel is 167 Kms and the designed depth of the channel is 12 M
below CD. To achieve the designed depth, dredging is required in 89 Kms. stretch involving 82.5
million cubic meters (Cu.M.).
The project will lead to saving in navigational distance upto 424 nautical miles (1 nautical
Mile = 1.852 kms.) and the saving in time upto 29.9 hours. The project will give boost to coastal
movement of cargo. The project will also enhance the national security and would lead to overall
economic development of the region.
Dredging in one section of the channel has already commenced from 2nd July, 2005. More
than 20 lakh Cu.M. have been dredged so far. Bids for other dredging contract packages are under
evaluation.
The project is expected to be completed by December, 2008.
Third Container Terminal at Jawaharlal Nehru Port
Government approved the proposal for award of contract for the redevelopment of Bulk
Terminal into Container Terminal project on Build, Operation and Transfer (BOT) basis on
22.6.2004. The Jawaharlal Nehru Port Trust has signed the License Agreement on 10.8.2004 with
8
Gateway Terminals India Pvt. Ltd., a joint venture company formed by Maersk A/S-CONCOR
Consortium. The container terminal is expected to be operational in August, 2006. This will be the
third container terminal in Jawaharlal Nehru Port. On completion, the terminal will have capacity
for handling about 1.3 million TEUs of container traffic per annum, thus adding substantially to
the capacity of the port to handle container traffic.
Fourth Container Terminal at Jawaharlal Nehru Port
Feasibility Study for setting up the fourth container terminal and marine chemical terminal
at Jawaharlal Nehru Port is being carried out by M/s Consultancy Engineering Services (India) Pvt.
Ltd., New Delhi and the final report has been received by the Port. Considering the growth rate of
container traffic, Department of Shipping has asked Jawaharlal Nehru Port Trust for a road map
for operationalising the fourth terminal by March, 2009.
Some of the major new initiatives proposed to be taken for augmentation of the
Infrastructure in the Port Sector are listed below:
A.
KOLKATA
??Construction of two additional berths inside the impounded Dock Arm – Rs.120
crores.
??River Regulatory Measures for improvement of draft in Hooghly Estuary –
Rs.385 crores.
B.
PARADIP
??Deepening of channel to handle 1,25,000 DWT vessels – Rs.154 crores.
??Construction of berths for clean cargo on BOT basis – Rs.138 crores.
??Construction of Deep Draught Iron Ore/Coking Coal Berth on BOT basis –
Rs.328.30 crores.
C.
VISAKHAPATNAM
??Deepening of Inner Harbour entrance channel from (-)11.6 m and turning circle
from (-) 12 m to (-) 16m to facilitate vessels of 14m draft at IH berths – Rs.202
crores.
??Enlarging the scope of outer harbour for 2,00,000 DWT iron ore vessels by
realigning the break water, dredging, etc. – Rs.320 crores.
??Construction of West Quay 6 berth on BOT basis.
D.
ENNORE
??Development of a Coal Terminal (to handle coal for users other than TNEB) –
Rs.300 crores.
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??Development of an Iron Ore Terminal – Rs.350 crores.
??Development of a Container Terminal [Phase-1-700 m in length] – Rs.700
crores.
??Development of a LNG Terminal – Rs.200 crores.
??Capital Dredging for development of new terminals and deepening of Port
Basin and Approach Channel.
E.
CHENNAI
??Second container terminal – Rs.495 crores.
??Improvement in port connectivity by bridging gap in EMRIP Project.
F.
TUTICORIN
??Development of second container terminal - Rs.150 crores.
??Inner harbour development including construction of a new berth accompanied
by dredging - Rs.450 crores.
??A new dry bulk cargo handling berth - Rs.40 crores.
??Widening and strengthening of internal road network.
??Steps for development of liquid cargo terminal.
G.
COCHIN
??LNG Regasification Terminal – Rs.1600 crores.
??International Container Transhipment Terminal – Rs.2118 crores.
H.
NEW MANGALORE
??Development of a Coal Handling Facilities for captive user.
I.
MORMUGAO
??Wagon Handling System – Rs.80 crores.
J.
MUMBAI
??Construction of two off-shore container terminal – Rs.1163 crores.
K.
JAWAHARLAL NEHRU
??Deepening & widening of main harbour channel and JN Port Channel Phase-I –
Rs.800 crores.
L.
KANDLA
??Setting up of state-of-art container terminal through BOT at 11th & 12th cargo
berth with back up area of 40 hectares.
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Perspective Plan for Major Ports
It has been decided to prepare 20 years Perspective Plans for each major ports with the
assistance of international consultants. The Perspective Plans will take into account the traffic
projections during the period and layout the long term vision for the port including the goals to be
achieved, strategy to be followed for achieving the goals, plan of action to implement the strategy
as also the sources of funding.
Private Public Participation in Port Infrastructure
In tune with its economic liberalization policy, the Government of India has opened up its
major ports for private sector participation in a big way to attract funds, latest technology, better
managerial practices and speed up creation of capacities. Foreign direct investment upto 100%
under automatic route is permitted for construction and maintenance of ports and harbours.
In the 10th Plan (2002-07), it has been decided to give a major thrust to private sector
participation in the major ports and a total of 41 schemes involving investment of about US$ 2.47
billion have been identified for implementation in the private sector in addition to investment of
about US$ 1.19 billion from public funds. So far 17 projects involving private sector investment of
Rs.6130.20 crores have been approved and further 21 projects involving an investment of Rs.4517
crores are in the pipeline.
The preferred route for private sector participation is through open competitive bidding in
which the bidder offering the highest percentage of revenue share is selected. Tariff Authority for
Major Ports (TAMP) which is an independent statutory authority fixes the tariffs to be charged
from the port users by the private operators. These tariffs acts as ceiling and the private operators
are free to charge below these ceilings.
The following areas which are
participation/investment by private sector:-
indicative
in
nature
have
been
identified
for
Leasing out existing assets of the port.
(b)
Construction/creation of additional assets, such as:
?? construction and operation of container terminals.
?? construction and operation of bulk, break bulk, multipurpose and specialized cargo
berths.
?? warehousing, container freight stations, storage facilities and tank farms.
?? cranage/handling equipment.
?? setting up of captive power plants.
?? dry docking and ship repair facilities.
(c)
(d)
(e)
Leasing of equipment for port handling and leasing of floating crafts from the
private sector.
Pilotage.
Captive facilities for port based industries.
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Model Concession Agreement for PPP Projects
It is proposed to engage International Consultants for preparing Model concession
agreement for Public Private Partnership projects in major ports.
Tariff Authority on Major Ports
Tariff Authority for Major Ports (TAMP) has been set up as a statutory authority under the
MPT Act to decide on questions pertaining to fixation and revision of tariff in major ports with a
view to provide a level playing field for port operators including major ports and private operators.
This is necessary as one of the salient features of the BOT procedures for promoting private
investments in Ports was that no guarantee is to be given in respect of return to the investors.
There has been suggestions in the recent past for diluting the role of TAMP in tariff
fixation and leaving it to market forces. Till the time there is adequate capacity and a reasonable
degree of competition, enabling a user to choose port of his choice, the sector needs to be
regulated. The rates in such a scenario can not be left to be determined entirely by the market. In
fact the container terminal at JNPT, which is operated by M/s P&O Ports, is occasionally not
accepting export cargo by shutting gates. Hence, presently the situation in Ports is one where
demand is more than the capacity and therefore, we definitely need an independent tariff setting
authority. The autonomy of such an authority is very important as we have to ensure a level
playing field between public and private terminals in major Ports and also to ensure fairness in a
monopolistic situation. Hence, TAMP should continue as an independent authority for fixing
tariffs. Government has, however, issued guidelines for fixing tariffs keeping in view the interest
of port users and also ensuring just and fair return to operators.
Dredging Corporation of India(DCI)
?? DCI, a PSU under the Administrative control of this Ministry earned a profit(after tax)
of Rs. 113.29 crores during the financial year 2004-05.
?? DCI declared payment of dividend of 120% for the year 2004-05 and the government
share was Rs 26.40 crores.
Rail Road Connectivity of Major Ports
Being aware of the fact that poor rail and road connectivity was affecting cargo movement,
the Government constituted an inter-ministerial Committee of Secretaries to review the rail road
connectivity of major ports with a view to improve the infrastructure, and thereby facilitate trade.
This Committee, over a series of meetings, reviewed the existing connectivity by rail and road and
the future requirements of all major ports taking into account the projected increase in traffic. The
Committee also deliberated upon the issue of funding for the road connectivity projects. The
Committee is now in the process of finalizing the report containing its recommendations.
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DEPARTMENT OF ROAD TRANSPORT & HIGHWAYS
*******
BACKGROUND NOTE
Introduction
1.
ROAD DEVELOPMENT
1.1
India has one of the largest road networks in the word, aggregating to about 3.3 million
kilometers at present. The country’s road network consists of National Highways, State Highways,
Major / Other District Roads and Village / Rural Roads. Of these, the National Highways and the
State Highways together account for 1 95,000 kilometers length. Though, the National Highways,
which is the responsibility of the Central Government, has 65,569 km length and comprises only 2
per cent of the total length of roads, but carries over 40 per cent of the total traffic across the
length and breadth of the country. The strain on the network is increasing by the day. The
numbers of vehicles have been growing at a rapid pace of 12 per cent per annum over the last
few years and, consequently the traffic on the roads is growing at 7-10 per cent per annum. The
share of road in total traffic has been growing from 12 per cent of freight traffic and 31.6 per cent
of passenger traffic in 1950-51 to a projected 65 per cent of freight traffic and 85 per cent of
passenger traffic by the end of the 10th Plan period. The rapid expansion and strengthening of the
road network, therefore, is imperative, both to provide for present and future traffic and for
improved accessibility to the hinterland. In addition, road transport needs to be regulated for
better energy efficiency, lesser pollution and enhanced road safety.
1.2
The Ninth Plan (1997-2002) laid emphasis on coordinated and balanced development of
road network in the country. During this period, the Government also embarked on a massive
National Highways Development Programme (NHDP), which has made substantial progress.
During the Tenth Plan the completion of the NHDP as well as removal of deficiencies in the
existing National Highway Network are envisaged for faster movement and safer travel over long
distances and also to give a boost to the economy.
1.3
The Tenth Plan outlay for the Central Sector Roads Programme is Rs.59, 700 crore (which
includes Rs.500 crore for Roads of Inter-State and economic importance). The gross budgetary
support is Rs 34,790 crore and the share of Internal and Extra Budgetary Resources in financing
the plan are estimated at Rs.24, 700 crore.
1.4
The standards and conditions of the National Highway network are inadequate to
meet rapidly growing demand for freight and passenger traffic.
In 2005, about 35%
of the total National Highway network was still of single-lane standard, 54% two-lane
standard and only 11% were of four-lane or more standard. The present National
Highways network has capacity constraint, which has negative consequences for road
user costs, road safety and the quality and frequency of transport services.
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2.
NATIONAL HIGHWAYS
2.1
The Central Government is responsible for development and maintenance of the National
Highways system. The total length of the network, as of today, is 65,569 km including about 7457
km length of newly declared National Highways in February, 2004. The Ministry is carrying out
development and maintenance work of National Highways through three agencies viz National
Highway Authority of India (NHAI), State Public Works Departments (PWDs) and Border Road
Organisation (BRO).
2.2
Looking at the need to improve the road sector, the Government of India has taken up a
major development project for improvement of National Highways i.e. National Highways
Development Project (briefly knows as NHDP). To take up this massive task of upgradation of
National Highways in the country, “National Highways Authority of India” (NHAI) was set up under
the Ministry of Shipping, Road Transport & Highways. NHAI has been vested with special powers
for taking certain investment decisions, acquisition of land and speedy implementation of the
projects.
2.3
The Phase-I & Phase II of NHDP comprises :
(i)
Golden Quadrilateral i.e. National Highways connecting four metropolitan cities i.e.
Delhi, Mumbai, Chennai & Kolkata having an aggregate length of 5846 Km.
(ii)
North-south & East-West Corridor which comprises 4-laning of 7300 Km of National
Highways connecting North-South corridor from Srinagar to Kanyakumari with CochinSalem spur and East-West corridor from Silchar to Porbandar.
(iii)
356 Km length of National Highways are proposed to be upgraded to 4-lane standards
for providing connectivity to 10 major ports of the country to NHDP.
(iv)
Upgradation of 777 Km of other important National Highways.
2.4
The total estimated cost of the NHDP Phase I & II having a total length of 14,331 km is
about Rs.64,639 crore.
2.5 The present status of various programmes on NHDP as on 30th September, 2005, are as
under:
??Golden Quadrilateral (GQ)
Total Length of GQ is 5846 Km out of which four laning of 5000 km has been
completed (85.52% progress) and work is going on in the remaining length.
Golden
Quadrilateral is likely to be substantially completed by December,2005.
??North-South & East-West Corridors
Total length of corridor is about 7300 km out of which four laning of 784 km length
has been completed and 3691 km length is under implementation, 2722 km length is to be
awarded. North-South & East-West Corridors are targeted for completion by December,2008.
??Port Connectivity and Other National Highways
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Out of 356 km under Port connectivity, so far 99 Km has been completed and
remaining 291 km is under implementation. Out of 801 Km of other National Highways, so far 287
Km has been completed, 291 km is under implementation and balance length is to be awarded.
2.6.1
NHDP Phase III
2.6.1 Phase –III, comprises widening of existing National Highways to 4/6 lane standard of
about 10,000 Km having high traffic density, connecting important tourist locations, economically
important areas, State Capitals
2.6.2
Government has recently approved upgradation of 4,000 Km under NHDP Phase-IIIA at
an estimated cost of Rs,22,000 crore as also to take advance action in the form of
preparation of the Detailed Project Reports for the balance 6,000 km under Phase-IIIB.
2.6.3
The present status of NHDP III A :
The total length under NHDP-III A is about 4015 km out of which work of four laning in 926
km length has been awarded. The NHDP Phase-IIIA is targeted for completion by
December,2009 .
2.7 Special Accelerated Road Development Programme in North-East Region (SARDP-NE)
This Ministry has framed a "Special Accelerated Road Development Programme in North
Eastern Region" for improving road connectivity to remote places of NE region. It envisages
improvement of about 3251 km of National Highways, 2500 km of State roads and 1888 km of GS
roads. This will ensure the connectivity of 34 district head quarters to the National Highways,
which are presently not connected by the National Highways. With the estimated cost of the
proposal is Rs.12,123 crore. This programme is proposed to be implemented in three phases.
Phase A: It consists of 1110 km of National Highways and 200 km State and General
Staff (GS) Roads at an estimated cost of Rs. 4618 crore
Phase B : It involves improvement of 2141 km National Highways and 2981 km State and
General Staff (GS) Roads at an estimated cost of Rs. 5920 crore.
Phase C: It envisages construction and improvement of 1027 km of State roads at an
estimated cost of Rs. 1585 crore.
The Government has recently approved implementation of Phase A and also given
approval for preparation of Detailed project Reports (DPRs) for roads in phase B. The works to
be executed under this proposal is targeted for completion within 7 years.
2.8
Apart from capacity augmentation by 4 / 6 laning of National Highways under
NHDP, the Government has also undertaken the programme for Improvement of Riding
Quality, widening to two lanes, widening to four lanes, construction of bridges and by-pass of
National Highways which are not included in the NHDP programme.
Overall achievements made by the Ministry through all agencies i.e. NHAI, State
PWDs and BRO under different schemes of development of National Highways during the
financial year 2005-06 up to September 2005 are as under
15
Name of Scheme
Targets
as
per Achievements
Action Plan 2005-06 during 2005-06
1) Improvement of low grade
sections (km)
2) Widening to 4-lanes (km)
3) Widening to 2-lanes (km)
4) Strengthening of existing weak
pavements (km)
5) Improvement of riding quality
programme (IRQP) (km)
6) Rehabilitations / Construction of
Bridges ( No.)
7) Construction of Bypasses (No.)
3.
13
14
328
311
507
417
437
694
632
1207
26
51
2
1
The Way Ahead
A Committee on Infrastructure headed by the Hon’ble Prime Minister has proposed a
massive National Highways development Programme which envisages an investment of Rs.
1,72,000 crores on various Programmes as under:
(i)
Completion of GQ and EW-NS corridors
(ii)
4-laning of 10,000 km under NHDP Phase-III
(iii)
2-laning with paved shoulders of 20,000 km of National Highways under NHDP
Phase-IV
(iv)
Augmenting highways in North East under Special Accelerated Road
Development Programme (SARDP-NE)
(v)
6-laning of selected stretches of National Highways under NHDP Phase-V,
(vi)
Development of 1000 km of expressways under NHDP Phase-VI
(vii)
Construction of Ring Roads, Flyovers and Bypasses on selected stretches on
National Highways under NHDP Phase-VII.
4. The control of National Highway (Land and Traffic) Control Act 2002
In order to remove encroachments and to avoid ribbon development along National Highways,
Government of India has enacted the above act through the Parliament in 2002. This act
empowers removal of any type of encroachment within Right of Way (ROW) of National Highway
and control of traffic.
4.1 National Highway Administrations
Under the above Act, a notification for setting up 192 National Highway Administrations at
different locations in the country has been issued on 20.12.2004. These Highway Administrations are
empowered to prevent unauthorized occupation of highway land and regulate traffic/access thereon,
as also to impose penalty for unauthorized occupation of highway land.
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4.2 National Highway Tribunals
Under the above Act, establishment of National Highways Tribunals to exercise the jurisdiction,
powers and authority is to be done. A notification for setting up of 8 National Highway Tribunals
at different locations has been issued.
5.
Central Road Fund
5.1
The Union Government also allocates funds for development of State Roads to the
respective State Governments under Central Road Fund (CRF) Scheme. Central Road
Fund was constituted by setting apart an amount of Rs. 2.64 paise per litre out of the
Custom & Central Excise Duty levied on petrol for the development of the State Roads on
1st March 1929. The cess was increased from time to time to meet the challenges of
accelerated funding requirement for all categories of roads in the country the Central Road
Fund has been revamped in 1998-99. This fund is non lapsable and has been given a
statutory status by Central Road Fund Act enacted in December 2000
Presently, a cess of Rs. 2.0 per litre on petrol and high speed diesel is being levied. Out of this the
amount of Rs. 1.5 is being allocated in the following manner:
50% of the cess on high speed diesel (HSD) oil for development of rural roads.
50% of cess on HSD and the entire cess collected on petrol are allocated thereafter as
follows:
(I)
(II)
a)
b)
c)
An amount equal to 57.5% of such sum for the development and maintenance of
National Highways;
An amount equal to 12.5% for construction of road under or over bridges and
safety works at unmanned railway crossing; and
An amount equal to 30% on development and maintenance of State Roads. Out of
this amount, 10% shall be kept as reserved by the Central Govt. for allocation to
States for implementation of State Road Schemes of Inter-State Connectivity and
Economic Importance to be approved by the Central Government.
5.2 Balanced cess of Rs. 0.5 per litre is entirely allocated for development and maintenance of
National Highways.
5.3 During the current year 2005-06 till 30th September, 2005, 206 numbers of proposals
amounting to Rs.656.38 crore have been sanctioned for improvement of State Roads under
CRF.
6.
Economic Importance & Inter State connectivity Scheme
To promote inter-state facilities and also to assist the State Governments in their economic
development through construction of roads bridges of Inter-state and Economic Importance,
Central Government provides 100% grant for inter-state connectivity projects and 50% grant for
projects of economic importance from CRF in accordance with the provisions in the Central Road
Fund Act, 2000 as passed by the Parliament in December 2002.
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The Ministry has so far accorded in principal approval to 92 numbers of projects
amounting Rs. 485.71 crore with central share of Rs. 242.86 crore under EI scheme and 140
numbers of proposals amounting to Rs. 669.14 crore under ISC scheme. Since year 2000 till
September, 2005, 108 nos. of proposals amounting Rs. 381.25 crore have been sanctioned.
7.
Public-Private Partnership
Traditionally, the road projects were financed only out of the budgetary grants and were
controlled/supervised by the Government. The road sector has attracted very limited private
sector participation in the past. While the traffic has been constantly increasing at a rapid pace,
the traditional system of financing road projects through budgetary allocation has proved to be
inadequate. It was in this context that the necessity for exploring the innovative means of
financing the highly capital intensive road projects was felt.
7.1
The beginning of a significant private sector participation in road projects was made with
the launching of India’s largest road project- National Highways Development Project (NHDP). To
encourage private sector participation, several initiatives have been taken by the government;
which include??Declaration of the road sector as an industry.
??Provision of capital subsidy up to 40% of the project cost to make projects commercially
viable.
??Duty free import of high capacity and modern construction equipments.
??100% tax exemption in any consecutive 10 years out of the first 20 years of a project.
??Provision of encumbrance free site for work, i.e. the Government shall meet all expenses
relating to land and other pre-construction activities.
??Foreign Direct Investment up to 100% in road sector.
??Easier external commercial borrowing norms.
??Higher concession period, (up to 30 years).
??Right to collect and retain toll.
??Equity participation by NHAI to lend credibility to promoters of a project.
7.2
Following three types of models/approaches are in use to encourage private participation
in financing highway projects:
7.2.1 BOT (Toll) Scheme
?? In a BOT project, the concessionaire (private sector) is required to meet the upfront cost
and the expenditure on annual maintenance. The Concessionaire recovers the entire
upfront cost along with the interest and a return on investment out of the future toll
collection.
?? The viability of the project greatly depends on the traffic (i.e., toll). However, with a view to
bridge the gap between the investment required and the gains arising out of it, i.e., to
increase the viability of the projects, capital grant is also provided (up to a maximum of
40% of the project cost has been provided under NHDP).
?? Each BOT project is awarded through competitive bidding basis.
?? The selection is made based on the least grant (subsidy) quoted by the bidders (the
concession period being fixed, toll rates pre-defined).
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?? Model Concession Agreements (MCA) have been finalized which provide equitable rights
to both the Client (Government/NHAI) and the entrepreneur (private Sector).
??
So far 57 projects have been taken up valued about Rs.12187.51 crore on Built Operate
and Transfer (BOT) basis (Toll based projects). Out of this, 23 numbers of projects have
been completed and 34 projects are under progress.
7.2.2
BOT (Annuity ) Scheme
?? In an Annuity project, the Concessionaire (private sector) is required to meet the entire
upfront cost (no grant is paid by the client) and the expenditure on annual
maintenance. The Concessionaire recovers the entire investment and a predetermined cost of return, out of the annuities payable by the client.
Each Annuity project is awarded through competitive bidding basis. The bidders are initially prequalified based on their experience, financial strength and capacity.
?? The selection is made based on the least annuity quoted by the bidders, (the
concession period being fixed).
?? The risk with respect to traffic (toll) is retained by the Client (Government/NHAI) since
the client collects the toll.
?? 8 number of projects valued about Rs.2354 crore, has been taken on Annuity basis of
which all projects except only two amounting to Rs.664.30 crore are completed.
7.2.3 Special Purpose Vehicle (SPV) Scheme
The Ministry has worked out a novel mechanism to leverage NHAI funds to setup special
purpose vehicles (SPVs) for some projects. Under the scheme, the NHAI puts in a certain
amount of equity into the SPV with or without a partner and uses this equity to raise money from
the market. The money is paid back from the toll revenues.
?? 12 projects valued about Rs. 2339 crore have been awarded under SPV funding. Five
projects amounting to Rs. 890 crore have been completed so far.
8.
Financing Highways Development programme in India
The Government took very important steps for financing NHDP, which include the following:
(i)
(ii)
(iii)
(iv)
Cess on diesel and petrol under the non-lapsable and dedicated Central Road Fund to
provide funds for road sector for financing / leveraging additional resources.
Securitization of cess (market borrowings on the strength of future inflow of cess).
Involving private sector and encouraging public private partnership (PPP)
.Avail long term external loans from the World Bank and ADB
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