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“Difficult days are over for Cochin Port, we are on the recovery path,” says Dr M Beena, Chairperson, Cochin Port Authority, Infra News, ET Infra

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 Dr M Beena, Chairperson, Cochin Port Authority
Dr M Beena, Chairperson, Cochin Port Authority

MUMBAI: “Focusing on key areas – cost control, increase in cargo throughput, improving productivity and increasing efficiency has helped Cochin Port Authority to improve its finances,” says Dr M Beena, Chairperson, Cochin Port Authority.

With limited potential for monetisation of cargo berths due to the limited hinterland and the cargo profile, Cochin Port Authority is looking to lease the land parcel it owns for logistics related activities, not just port related but also for the warehousing needs of ecommerce players.

In an exclusive interview to ET Infra, Dr Beena dwelt at length on various aspects relating to the port. Excerpts:

What is the impact of the concession scheme that was rolled out a few months ago to attract more container ship calls to Cochin Port?

The new scheme has helped the port to get new lines/services at the International Container Transhipment Terminal (ICTT).

When other Indian container ports are seeing some blank sailings due to the current global scenario from October, we are getting two additional services which will translate into eight additional calls per month.

These have happened entirely because of the new concession scheme. A few other shipping lines are also showing interest to call at Cochin Port. In another couple of months, we may get additional services.

What are the monetisation opportunities that you have as part of the National Monetisation Pipeline (NMP)? Now you are a landlord under the new Major Port Authorities Act?

Monetisation of berths in Cochin Port, unlike other major ports, is a challenge due to the current cargo mix. Cargo in Cochin is predominantly liquid bulk and container. While the container and LNG berths are already on PPP, the other liquid cargo berths cater to the requirements of three State-run oil majors – IOCL, BPCL and HPCL – which, by and large, act as their dedicated facilities with infrastructure support being provided by the port.

Therefore, there is not much to be achieved by monetisation of these liquid cargo handling berths through PPP. Moreover, monetisation of these berths will bring down our revenue realisation as the operator will only share a portion of the revenue earned with the port authority.

We tried to monetise berths for bulk/general cargo handling but did not get a positive response from the investors.

But this argument holds valid for all major ports. So, why go for PPP at all and risk getting only a share when currently ports are collecting all revenue from self-operated berths
?

It depends on the cargo mix as well as the handling arrangements of a particular port. Some ports may require private participation through PPP to augment its capacity to support the demand of the hinterland.

Which means there is not much scope for PPP in Cochin Port?

Cochin Port has already gone into PPP mode in container and LNG. But we did not get any positive response from the prospective investors when we tried to monetize berths for bulk/general cargoes.

The arrangement with oil majors is on a captive basis …

The berths belong to us, the Single Point Mooring (SPM) is provided by BPCL, it’s a captive facility. But the other berths like COT, STB, NTB and Q4 are common user facilities.

Then the only thing you can monetise is the land bank you have….

Yes. We are working on that and since COVID is over now, the market has picked up. So, our tenders are fetching relatively better rates.

What is the lease period?

Normally, a 30-year lease is the standard unless there is a very prime property where the investment will be so high that 30 years is not going to work out. In such cases, we can lease it for 60 years.

So, you have renewed the lease for the Taj Hotel property….

The Taj Hotel has gone back to the Tata Group for another 30 years and we have got a decent increase.

What is the arrangement there?

There will be an annual increase of 2 percent besides an increase once in five years per the Scale of Rates (SoR) that translates into 6-7 percent. It’s not a fixed rate but based on the market it varies and that continues for 30 years.

Given the fact that Kerala is short of land for industries, you are sitting on huge tracts of land which you can monetise…

Not huge, because a lot of land has already been monetised. We are getting Rs100 crore plus every year from our land. So, already a large chunk has been monetised. Now, we have 2-3 prime chunks such as a 56-acre parcel which is surrounded by water and is great for tourism purposes. We are going to come out with a tender for that in a couple of months.

What all can be developed on that land?

Almost anything. We are making it very flexible. We are making it so flexible that other than real estate – housing and related things – pretty much anything can be done.

Who will take care of the environmental and coastal regulation zone clearances?

Whoever gets, it will be his responsibility to get the environmental and coastal regulation zone clearances per the designs of the structures that they are going to build.

Won’t that be a discouraging factor for investors?

Had it been a PPP model where a private firm was doing it for the port, the onus of obtaining the clearances rests with the port authority. The leasing of 56 acres will be on a land lease model. Therefore, the successful bidder will have to get environmental and coastal regulation zone clearances for the project.

With the latest relaxations, the market is now looking good for leasing of land and build-up spaces.

Warehousing is a good opportunity to tap given the ecommerce boom…

Our 100 acres of land, we are looking to develop it only for logistics related activities, not just port-based logistics but also for ecommerce players.

We found that warehousing is a felt need, especially in the islands, hence, we get very good responses during tenders.

We are looking at giving it to entities who will develop build-to-suit warehouses. If the Ministry gives us some funds, then we will go for green warehouses to make these environmentally friendly.

At what level of cargo do you think your port is breaking even?

Operationally we are more than break-even. We have made operational surplus/profit at around 30/32 mt of cargo a year. Now, we are doing more than 34 mt.

What is your cargo mix?

About 60-65 percent is petroleum and 25-30 percent is containers. That leaves just around 5 percent, comprising a little bit of fertilizer, LNG, and cement.

What is the other cargo that you can potentially think of? Is there anything on the horizon?

There are cargoes which are either going by road or by rail. Those need to be channelised into coastal shipping. Every year, GDP is growing, more consumer products are being produced and consumed.

The modal shift of cargo is what we are exclusively focussing on. We have created a business development division just to look at that and attract additional business.

For a short haul, say from Tuticorin to Cochin, it is economical to come by road, there is no point in putting it on a vessel and shipping it. But long haul, say, from Kolkata or Gujarat, makes a lot of sense to change over from road or rail to sea.

We are doing a lot of trade development meetings in the eastern part of the country as well as in Gujarat, Tamil Nādu, Andhra Pradesh/ Telangana and Karnataka. That is why food grains, jute, tiles, fertilisers, salt, and sanitary wares which were earlier coming by rail/road have started moving by coastal shipping. The PDP project of BPCL has already started contributing to our volumes. This was also facilitated by the Business Development division.

But the problem will be the first and last mile connectivity?

That is the crux of the matter. But these destinations we are talking of, even with this first and last mile connectivity issues, it works out to be cheaper. There are logistics service providers who are giving door to door service to overcome the problems.

What is the status of increasing the depth of Vallarpadam ICTT to accommodate bigger ships? The Ministry of Ports, Shipping and Waterways was understood to be in favour of that?

A proposal for development of the second phase of ICTT is currently under the consideration of the Ministry.

What are your finances looking like for the last full year?

The difficult days are over, and the port is on the recovery path.

What is your target for the year?

One thing we keep on focussing is the turnaround time or qualitative parameters. Cargo is quantity. But there is something called quality targets. Our turnaround time (TRT), crane moves per hour and pre berthing detention have improved significantly over the years.

Our TRT is the best in the country. During April to September, our overall TRT for all vessels stood at 35.39 hours, which is an improvement of 0.45 percent compared to the same period last year. Our ship berth day output has also shown an improvement of 5.13 percent, our pre berthing detention has come down by 53 percent, it was 11.79 hours last year, now during this period, it is 5.6 hours.

How are you achieving faster turnaround of ships?

In liquid bulk, which is a major cargo for the port, we have a scheme where we penalise for low or below par productivity in loading/ unloading of petroleum, oil, and lubricant (POL) products.

Similarly, if the productivity norms are achieved, we also reward them. This scheme, started under the direction of the Ministry, some 6-7 years ago, has done good on the productivity front for the port.

Plus, we have carried out revamping of the oil berths and installed new loading/unloading arms, which improved the discharge and loading rates. In containers, we are constantly doing 32 moves per hour per crane.

Our truck turnaround time at the container terminal – a truck reporting at the gate, entering and then coming out is only 32 minutes – is the best in the country.

That is a sea change from olden days when port users were sceptical of using Cochin port due to trade union issues..

Over the years, there has been a sea change on the trade union front in Cochin Port. There has been no strike by trade unions in the port during the last decade. They are co-operative towards any effort of bringing new cargo or for bringing policy changes.

That was bound to happen as the workforce numbers kept coming down, right?

It is very interesting to note that Cochin port, when it was handling around 10 million tonnes (mt) of cargo a year, had some 5,100 employees. Now we are handling about 34.5 mt, and we are doing it with around 1,000 employees. There has been a huge reduction in the workforce. However, thanks to the increased automation in cargo handling, containerization of cargo, etc, the operations are carried out with reduced strength.

All these reductions were through the natural process of attrition. Was there any voluntary separation scheme?

In the past, we had resorted to a golden handshake only once. The current employee strength at Cochin Port has come down to 1,018 and the numbers are likely to reach 710 in 2025 and 355 in 2030, all due to natural attrition.

What should be your ideal work strength a few years down the line?

The employee age profile is such that by 2025, the number will come down to 800 and by 2030, the strength would be around 400. As major ports are moving towards the landlord model, this number would suffice. Our pension fund will also improve if the current financial discipline is maintained.

Is D P World looking at expanding the capacity of the ICTT?

The current capacity of the ICTT is 1 million TEUs and they have achieved almost 73 percent of that.

The thought of increasing the depth and expanding the capacity of the terminal are happening in parallel. They are thinking of terminal expansion because it is almost reaching full capacity of the first phase and that is also when the thinking happened on deepening the channel.

D P World was thinking of expansion, then they thought about why they should not have berths with 16-meter draft to cater to the requirements of the shipping lines. That is how the issue originated.

Dredging is again a pain point for Cochin port…

Dredging is a big drain on our finances. The same quantum of dredging is not there every year but the kind of money that we are spending, only Kolkata port is spending more than that and Kolkata is subsidised by the Central government.

When Vizhinjam port comes up, do you think some of your traffic will divert?

We consistently believe that the pie is large enough for both Vizhinjam and Cochin ports if we are able to attract transhipment from Colombo to India as part of the ‘Atma nirbhar Bharat’ initiative.

There is enough volume for Vizhinjam and Cochin ports and Cochin has the added advantage that it has export-import (EXIM) trade along with transhipment. Since we have better connections to the hinterland, I think we will be able to hold on to our cargo and even grow.

New private ports coming up in the vicinity of major ports are posing a threat…

Operationalization of new private ports are going to pose a challenge for the existing major ports. This, however, will force the major ports to become efficient and cost effective.

Maybe you can look at strengthening your cruise business…

There are two ways we are looking at it. One is, there is an increasing presence of the Navy and the Coast Guard at Cochin due to strategic reasons. They are constructing more ships to consolidate their respective positions in Cochin. We are looking at long term arrangements with them.

On the Mattancherry side, we would like the Navy and the Coast Guard to have their presence, and, on the Ernakulam side, we want it to be the cruise hub.

We are looking at bidding out our ‘Sagarika’ cruise terminal through the O&M route. We have had initial discussions on this. We expect to issue a tender in the last quarter of this financial year.

Once the successful bidder takes over the ‘Sagarika’ cruise terminal and develops the surrounding areas further, it will transform into a tourism hub. We are looking at it from a long-term perspective that sooner or later, it will all be developed from a tourism point of view.

We know that we can’t just wish for bulk cargo. It will not happen. There is, however, a big potential for cruise tourism.

You have built the cruise terminal on your own?

The construction was done by us under financial assistance from the Ministry of Tourism, Government of India.

How is the LNG regasification terminal run by Petronet LNG shaping up?

LNG is the silver lining for us. Once the pipeline connectivity to Bengaluru is completed, the volume is likely to touch the installed capacity of the LNG terminal.

What is the plan to make Cochin a bunkering hub?

Bunkering volumes are growing. In the year 2021-22, we handled nearly 3 lakh tonnes of bunker. We are now looking for additional barge loading points since the volume is continuously going up. Basically, there is a good market for bunkering at Cochin port which has developed over the years as the preferred destination for quality bunkers. We have approached the Government of India for rationalisation of the GST rates.

Even with the current rate of GST, we are seeing that there is a reasonably good market. Since we have the presence of the three oil majors along with some major private players, they can easily take the lead in this and if the GST reduction also comes through, it will really help.

In the first half of the current fiscal, we have registered a 16.5 percent growth in bunkering compared to the same period last year. IOCL is planning big on bunkering. During COVID, we had a lot of sign on/sign off of ship crew in Cochin port, so when the vessels stopped by for crew change, they took bunkers also. And because of that, now we have become a preferred bunkering destination.

How much revenue are you expecting from the international ship repair facility being developed by Cochin Shipyard at the port?

We haven’t worked out yet. We have a basic lease rate for land so some amount will come to us anyway, plus revenue from ships coming for repairs, that is also a source of revenue through vessel related charges (VRC).

When the ship repair facility becomes big, automatically it brings revenue to us through VRC. It is a very good deal.

Have you taken any initiatives on green energy?

Cochin Port proposes to provide on shore power supply of 6 MVA at Ernakulam Wharf at an estimated cost of Rs22.34 crore with 100 percent funding from the Ministry of Ports, Shipping, and Waterways under the Sagarmala Scheme. This project will help foreign cruise vessels calling Cochin to reduce their carbon emissions as they will switch off their generators run on fossil fuel and utilize the green power. It will save considerable cost to the shipping lines.



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