Week ending August 14, 2002

News on Shipping

NSDRC to rebuild abandoned ship The National Ship Design and Research Center (NSDRC) has taken up the task of reconstructing an abandoned passenger-cum-cargo vessel of the Union Territory of Andaman, with a modified design. Other shipyards, which have also come forward for the project, have quoted about Rs. 50.0 crore for the job while NSDRC has expressed its willingness to take it up for only Rs. 34.0 crore. The contract was earlier awarded to a private Construction company but stopped construction in the middle due to some faulty designs. The vessel has since been lying at the Kolkata port for the last fifteen years.

HRD Shipping and Concor join hands for cargo service With increase in volumes to Chittagong from India, HRC Shipping, Dhaka and the Container Corporation of India (Concor) have signed an agreement to jointly provide cargo service from South India to Bangladesh via the Chennai. Under the deal, Concor will be managing its multimodal logistics, while HRC Shipping would provide shipping options. The proposed service comes as a relief to South Indian exporters, as the road transportation to Chittagong, through India-Bangladesh border is very poor.

Two antiquated vessels sink With two antiquated vessels reportedly having sunk in the Indian Ocean over the last week has drawn the attention of the Shipping Industry. While the reasons for the sinking of the tanker MT Mario are unknown, the bulk carrier Jasmine started to go down due to flooding in the engine room. The crew of both the vessels were saved by their near by vessels.

SCI bidders impatient due to delays in security clearance The four bidders for the 51.0% percent equity of the Shipping Corporation of India (SCI) are getting impatient due to delay in the security clearance being insisted upon by the Central government. The bidders however, feel that with continuous downturn in the industry combined with delay in security clearance is making the bid less attractive for buyers, with every passing day. There has already been a sharp decline in the net profit of SCI from Rs 383.0 crore in FY 2000-01 to Rs 242.0 crore for FY 2001-02. To worsen matters for the bidders, the company has also reported a loss of Rs 6.0 crore in the first quarter of FY 2002-03.Due to the downtrend two of the remaining four bidders are already planning to withdraw from the bid.

Varun Shipping acquires its first tanker Varun Shipping Company Ltd. has acquired a 1983-built tanker with dead weight of 7,335.0 tonne on a bare boat charter cum demise (BBCD) basis. This is the third vessel and the first tanker to be inducted into the company fleet. Though the exact cost of the new tanker acquisition is not known, industry sources estimate it to be around US $ 2.5-3.0 million.

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News on Shipyard

HSL to cancel the tender for floating dock The Hindustan Shipyard Ltd (HSL) is likely to cancel the tenders for the supply of a floating dry dock. The Shipping Ministry has advised the yard to build a floating dock itself within the yard. HSL is keen in having the floating facility as its ship repair division has been making significant contributions to its annual turnover during the last two years, compared to the ship building division. The turnover of the ship repair department has increased by about fifty percent during the last three years. With this new facility the yards' ship repair business is expected to grow substantially in the coming years.

HPDE to recommission passenger-cum-cargo vessel ordered in 1989 Hooghly Dock & Port Engineers (HDPE) would recommission an 84.2 m long and 14.0 m wide vessel for the Andaman and Nicobar Administration. The vessel will have a capacity to carry 400 passengers and 100.0 tonne of cargo. The cost of the vessel is estimated at Rs 76.0 crore and is expected to be ready within two years. Although the Andaman and Nicobar administration had placed the order way back in 1989, the work did not progress due to resource crunch and other problems. It was decided that the National Ship Design and Research Center (NSDRC) would also be involved in the rapid completion of the work. of a floating dry doc

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News on Ports

Four companies short listed for the O&M contract at the Paradip Port The Paradip Port Trust (PPT) has short-listed four out of a total of six firms that responded to PPT's tender inviting bids for undertaking operation and maintenance (O&M) contract for the coal handling plant. Thirty-three firms had initially come forward for the tender but only six of them submitted their tender bids. The four firms short-listed include: L&T, Adani Port, McNally Bharat and South India Corporation (Agencies) Ltd. (SICAL) in partnership with Elcon Engineering and Orissa Stevedoring Association. The price bids of these firms are to be finalized shortly. The O&M operations are currently looked after by the L&T on a temporary basis.

VPT gets ISO 14001 accreditation Vishakapatnam port has become the first Southeast Asian port to receive the ISO 14001 certification for the entire range of port operations. The port has bagged the recognition through the implementation of a comprehensive environmental management programme, whose significant feature was the initiative to conserve water, power and fuel resources. The environment management programme has led to the restructuring of the inventory management system and substantial reduction in the maintenance and repairs expenditure.

Shipping Ministry's proposal for a limited tender opposed The Union Ministries of Finance and Law have opposed the proposal mooted by the Shipping Ministry to re-tender the plan for container transshipment terminal at Vallarpadam in Kochi port on a limited tender basis. The finance and the Law ministers were of the view that the selection of bidders under the limited tendering format would be open to questions and hence it would be essential to adopt the competitive bidding route. The shipping ministry has identified six major private firms, which would bid if their proposal were accepted. The six firms include: CSX Corporation, Maersk-Sealand, and P&O ports, PSA Corporation, Hutchison Port Holdings and Dubai Ports Authority.

HC stricture against delay in issue of NOC for Dholera project The Gujarat High Court has issued notice to the Gujarat Pollution Control Board (GPCB) for undue delay of one year in issuing no-objection certificate to the Dholera Port Ltd. (DPL), which has resulted in cost escalation of the project by Rs.140.0 crore. According to the petitioner Mr. Krishnakant Vakharia, the delay has also cost the company a 6.0 km long, 65.0 m wide sea front due to soil erosion. The DPL, a JK group company, had originally submitted the application for NOC to GPCB on January 2, 2001, but the application was kept pending till December 27, 2001. The NOC was received, but after a lapse of one full year on January 3, 2002, against a normal three-month period. The company had got the letter of intent (LOI) from Gujarat Maritime Board (GMB) in September 1998 for the development of multi-cargo, all-weather port in the Gulf of Cambay. Dholera port was one of the five greenfield sites to be developed by private promoters as per Gujarat's port policy of 1995.

Kochi port to become customer friendly The Cochin port trust has formed a comprehensive forum of all cadres of employees working in the port to address customer grievances and to make the port further user-friendly. The forum attempts to accelerate the commissioning of major projects such as container and bunkering terminals and initiate long term plans for placing Kochi at an advantageous position in the South Indian port sector.

XPS signs an MOU with Chinese firm The XPS Cargo Services has signed a memorandum of understanding with the Chinese Government owned China National Foreign Trade Transport Corporation for the inbound and out bound traffic movement between China and India and vice versa. This agreement is expected to boost the business volume by about 500.0 tonne by the end of the year.

IPBCC member lines to hike charges from Sept 1 As a part of the rate restoration programme the member lines of India/Pakistan/Bangladesh/Ceylon Conference (IPBCC) have decided to increase the freight rates by US $ 300.0 per TEU from September 1 2002. Due to increase in cost of bunkering, the bunker and fuel surcharge will also be raised to US $ 65.0 per TEU for The FCL cargo. Although the surcharge for the LCl cargo remains unchanged it is increased to 18.0% for the break-bulk.

Bedi records rise in edible oil imports There has been a significant increase in the volume of edible oil imports at the Bedi port since last year. From a mere two percent share of the country's total oil imports in FY 1999-00 the Bedi port has increased its share to five percent by FY 2001-02.With the increase in import volumes the port has improved its storage and other infrastructure facilities.

Petronet pipeline to connect Kandla with Bhatinda Petronet India Ltd. (PIL) has planned to construct a 1,443.0 km long petroleum pipeline connecting Kandla and Bhatinda. PIL has approached Indian Oil Corporation (IOC), Essar and Reliance in order to make the Vadinar-Kandla pipeline operational. This pipeline has become redundant due to the decision of IOC to convert the existing Kandla-Bhatinda product pipeline into a crude carrier. With Essar Oil's proposed nine million tonne refinery at Vadinar construction not being commenced, PIL's Vadinar-Kandla pipeline is currently carrying products from Reliance's refinery at Jamnagar to IOC's installation at Kandla.

Haldia creates new record in cargo handling The Haldia dock complex has handled the highest ever volume of cargo in the month of July this year. It is around eighteen percent higher than the previous year. Through multi dimensional development measures the port aims at handling 9.04 mt of cargo in the year 2002-03.

JNPT to build second box terminal on BOT basis The Jawaharlal Nehru Port Trust (JNPT) has decided to adopt the build, operate and transfer (BOT) route to develop their second private container terminal by converting the unutilized bulk terminal into a container terminal. There was originally a proposal for a joint venture between the port and a government-owned foreign port to undertake conversion work but it was subsequently called off, as most of the port trustees put forward conditions that were difficult to comply with. The government demanded a 74.0%stake in the venture, which the port was not ready to agree. Also the trustees of the workers suggested ban on P&O Ports from the bidding process due to the fear of a private monopoly at the port but this proposition is still under consideration. The project is estimated to cost about Rs 800.0 crore and will be the second such terminal at JNP to be developed with private sector participation.

China considers US Customs inspection at ports The Chinese government is mulling over the decision to allow the US customs inspectors to inspect cargo at its ports. The decision would enable the US Customs officials to be stationed at China's busiest container ports to scrutinize the US-bound containerized shipments and aid in searches. Already, Singapore, Canada and some European ports have agreed to cooperate. China, which is a major US trade partner along with other Asian counterparts have so far not made any decision in view of sovereignty issues and have demanded more information about the proposed agreement. Meanwhile, the US government has stated that the cargo arriving from non-compliant ports could face greater scrutiny and delays compared to the ports that have allowed US Customs inspection.

MbPT to sell a part of its real estate Mumbai Port Trust (MbPT) has decided to sell 350.0 hectares of its prime surplus land in South Mumbai. The decision, yet to be cleared comes in the wake of strong protests against increase in the rent from tenants currently occupying the land. Some of the leaseholders, of this land are also the strong contenders to buy the land and include big corporates like Hindustan lever, Britannia Industries, Bombay Dyeing, and the Tata group.

Maersk increases its stake in Pipavav Maersk has reportedly shown interest in buying an additional 13.0% stake in Gujarat's Pipavav port (GPPL), if the latter is willing to reduce its share price. Maersk had earlier picked up 13.0% stake for Rs 70.0 per share in FY2001 and had taken over the management control of the port. By investing about Rs. 800.0 crore, Maersk has plans to make GPPL a major container terminal in India. To finance the container terminal expansion project, the other shareholders including IDBI, UTI and Indian FIs have demanded that Maersk should put in its enhanced equity stake before the disbursement of more funds. The project is scheduled to be completed in two years.

Limited thermal coal arrivals pose a problem for Haldia Dock On an average one rake of empty wagons are being moved into the Haldia dock due to limited thermal coal arrivals. As per the linkage the dock is supposed to handle more than three rakes of thermal coal per day but only one arrives at the dock. There is thus a shortage of two rakes everyday. The reasons for limited arrivals are mainly due to insufficient production levels at the collieries of the Eastern Coalfields Ltd. and the nonpayment of dues by the Tamil Nadu Electricity Board.

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News on Logistics

CONCOR to build second warehouse at Nagpur The Container Corporation of India Ltd (Concor) has commenced the construction of its second warehouse at Inland Container Depot (ICD) at Nagpur on the 7th of August. The new warehouse would be ready in about four months and will have a cargo stacking area of two thousand sq.m. The warehouse ICD is expected to be a major boon to the trade in view of the increasing import-export traffic through ICD-Nagpur. The ICD will also be used as a bonded warehouse, which will be a new service provided through ICD- Nagpur to the importers in the central India.