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Kandla Port Trust set to unlock value from 25,000 acre land bank

LiveMint logoLiveMint 21-05-2017 Maulik Pathak

Ahmedabad: The Kandla Port Trust is implementing the landlord port model to unlock value from its 25,000-acre land bank, trust chairman Ravi Parmar said. Kandla Port Trust manages the Kandla Port in Gujarat’s Kutch district. 

In the landlord port model, the port authority retains the port infrastructure and regulatory functions, while port services are provided by private operators. 

Among key projects planned in this land bank is a smart industrial port city (SIPC), the first of 12 such cities the central government plans to develop at major ports across the country. 

The Kandla SIPC will give a major boost to Kandla Port Trust’s plans to achieve 185 million tonnes of cargo handling capacity by 2020 as it will encourage port-based industries to come up in the vicinity of Kandla port, which will significantly add to its port traffic while reducing transportation cost, Parmar said in an interview.

“The SIPC project is being set up at an estimated project cost of Rs1,200 crore and is expected to draw investments to the tune of Rs3,000-5,000 crore in the next three to four years,” said Alok Singh, deputy chairman of Kandla Port Trust. 

He said the figures were only initial estimates and the actual investment may be higher if an original equipment manufacturer or a refinery decides to invest in the proposed SIPC.

Companies manufacturing edible oil, furniture, wind-power equipment and salt-based chemicals are expected to come up in the smart industrial city, Singh said. 

“For a port like Kandla which has a huge land bank and is located far from the city, developing an industrial hub in its vicinity creates a win-a-win for both the industries and Kandla Port Trust. The port will get a dedicated in-bound and out-bound traffic from the industries setting up their base here and as the industries grow, the port’s cargo will also grow. Manufacturing units can benefit from the smooth supply chain that will save both time and cost,” said Anand Sharma, director of Mumbai-based Mantrana Maritime Advisory Pvt. Ltd, a consulting firm.

Kandla Port Trust has the largest land bank among major ports, and the shift to the landlord port model is in lines with the new Major Ports Authority Bill, 2016 aimed to bring transparency in operations of major ports. 

“If you look at some of the most successful ports across the world like the Port of Antwerp, mainly run by municipal authorities or government bodies for centuries, only recently they began following the ‘landlord ports’ model after they felt that unless they do not lease out their land to industries that uses port for import or export, they will not be able to increase their cargo traffic,” he said.

Kandla Port handled close to 106 million tonnes of cargo in 2015-16 (including cargo from two satellite ports at Vadinar and Tuna Tekra). 

Parmar said Kandla Port Trust is also exploring setting up a new port facility at Veeri in Kutch to be subleased to a private port developer to build an oil terminal. 

“Land was earlier leased out by Kandla Port Trust at nominal rates perhaps due to the lack of demand back then. However, the new land policy guidelines for major ports, wherein land can only be leased by way of auction has unlocked a lot of value for major ports like ours. For example, we auctioned 12,000 acres of salt pans last year that gave us a huge premium. Earlier, we used to get Rs144 per acre per year while this new market-determined rate gave Rs39,000 per acre per year,” Parmar said. 

Kandla Port began container cargo operations in January this year after auctioning two berths to a private firm. So far, it has handled close to 10,000 TEUs (twenty-foot equivalent units). Container cargo is the new growth area for Kandla Port Trust and the port expects to handle about 100,000 TEUs by the end of this year, Parmar added. The land will also be utilized for setting up warehouses, salt farms and tank farms, among others.

The SIPC is part of the ambitious Sagarmala project. The foundation stone for the project is expected to be laid later this month. 

The concept of port-led development is central to the Sagarmala initiative and it focuses on logistics-intensive industries. These industries can be structurally competitive if developed in proximity to the coast/waterways. They would be supported by efficient and modern port infrastructure and seamless multi-modal connectivity.

About 845 acres has been identified close to Kandla Port, where Kandla Port Trust SPIC is aiming to set up a modern industrial zone with logistics facilities and a dedicated railway siding for catering to port-based industrial clusters. Kandla Port Trust SPIC also aims to set up a modern township in an area of 580 acres in Gandhidham.

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