The outlook for cargo growth to remains strong over the medium to long term on the back of domestic requirements of coal for power sector, crude oil and other cargo, says ICRA in its latest research update on Indian Port Sector.
As per ICRA estimates, in FY15, total cargo handled at Indian ports have registered a modest increase of 5.4% to 1043 million tonnes from 976 million tonnes during FY14. The growth was pegged down by a relatively weaker cargo performance at the major ports which registered a modest growth of 4.7% in cargo volumes to 581 million tonnes in FY15. Non major ports on the other hand are likely to have pushed up the overall growth rate by recording a 10% growth in throughput on a yoy basis to 462 million tonnes in FY 15.
According to Mr. K. Ravichandran, Senior Vice-President and Co-Head, Corporate Ratings, ICRA, “The growth at major ports was pegged down due to continuing mining restrictions in major states like Karnataka, Goa and Orissa and other policy measures such as imposition of export duty. Apart fromPetroleum OIl & Lubricants (POL) segment, all other cargo categories including containers, fertilizers, coal and others showed growth in volumes at major ports.”
ICRA Research further noted that various initiatives and schemes of the GoI’s rolled out in the last few months are expected to have a favorable impact on the growth and investment in the port sector – With respect to these initiatives, Mr. K Ravichandran mentioned, “the approach and planning of the GoI is holistic and if implemented, the cumulative impact of these initiatives should boost the overall development of the sector and the Indian economy. The initiatives are not only aimed at addressing the issues being faced in a certain facet of port development, but together, they cover a wide spectrum of issues involving port infrastructure, connectivity, port services, tariff policy, project financing and clearances/approvals. Some of the initiatives such as the Sagar Mala project are indirectly targeted towards removing the bottlenecks which impede the optimal usage of the operational port capacities. ICRA Research believes that if many of these initiatives are effectively implemented, given that all these are inter-linked and are ultimately aimed at improving trade and cargo movement at Indian ports, it should boost the long term prospects for players in the Indian Port Sector.”
With respect to migration of old terminal operators at major ports to deregulated tariff regime, the situation continues to be in limbo as old terminal operators have rejected Ministry of shipping(MoS) rebid offer. In ICRA’s view, uniform application of 2013 guidelines to all existing terminal operators will provide the requisite impetus to fresh investments in the sector for capacity creation as well as for advanced technology in the existing terminals. The investments will in turn improve operational efficiencies and provide better services to trade
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