East Coast India Ports Climb in the Ring: Analysis

By George Backwell
Tuesday, June 10, 2014
Container Handling Market Share of East Coast Ports in India, FY13: Image courtesy of DMER

Adani Ports has acquired an interest in Dhamra Port, situated between the major ports of Haldia and Paradip. Its deep-water container terminal, if developed, will be a major threat to nearby Kolkata and Vishakhapatnam, considers Drewry Maritime Research in its latest Container Insight Weekly, excerpted here:

Adani Ports and Special Economic Zone recently announced the much-anticipated acquisition of Dhamra Port Company Limited (DPCL), a joint and equal ownership by Larsen and Toubro and Tata Steel. DPCL is a concessionaire at Dhamra Port (in the state of Odisha on the east coast of India) and has been entrusted with the responsibility of building and operating a multi-user, multi-cargo port. DPCL holds a 34-year concession which can be renewed for two additional 10-year periods.

Adani Port reportedly had been awaiting environmental clearances (received early this year) for Phase 2 expansion at the port and has also been serving as management consultants to the port. Dhamra Port handled 14.3 million tonnes of bulk cargo in the year ending March 2014, ~70% of which included coal imports.

Drewry believes that the acquisition of Dhamra Port brings many  benefits for Adani Ports, such as:
1) Dhamra Port gives Adani a scalable 100 mtpa facility on the east coast of India, which, along with 101m tonnes handled at Mundra in FY14, will further strengthen its existing position in the Indian port sector;
2) Dhamra Port has sea-side infrastructure and rail connectivity already in place along with the environment clearance for the second phase, however it needs to improve road connectivity;
3) The port can handle capesize vessels;
4) The acquisition could enable Adani Enterprises to route greater amount of coal imports for SAIL to Dhamra Port from their current discharge at competing ports once the required capacity at Dhamra Port is in place;
5) Last, but perhaps the most important, is the ports’ proximity to the mineral belt of Jharkhand, Orissa and Chhattisgarh, along with proximity to end consumers.

In terms of container handling facilities, the proposed development pipeline has a provision for two container berths. It is worth noting that, in the past, APM Terminals was reportedly interested in taking a stake in Dhamra Port to  develop a 500 thousand teu (which could be expanded) container facility.

It is worth noting that Adani Ports’ east coast entry actually happened late last year when the company announced that it had completed the construction of the steam coal import terminal at the Vishakhapatnam port, eight months ahead of schedule. The company had entered a concession agreement with Vishakhapatnam Port Trust (VPT) in March 2011 to redevelop and operate the facility.

According to the company, the redeveloped terminal can handle ~6.5m tonnes, and it is expected to handle ~3m tonnes in FY15. The company’s existing port assets (prior to Vizag and Dhamra), which include Mundra Port, Hazira and Dahej, were all located on the west coast of India.

Drewry's View

Adani Ports benefits from acquiring a scalable facility on the east coast of India, with commodities and consumers in the proximity. Dhamra Port however needs to improve on its hinterland connectivity.

Source: Drewry Maritime Research
 

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