Week ending May 28, 2002

News on Ports

Ennore Port planning deep-draft berths for handling crude and iron oreThe board of directors of Ennore Port have approved the proposal to go forward with setting up deep-draft berths for handling very large crude carriers (VLCCs) and iron ore. While the Ennore Port plans to only take up the capital dredging work to increase the draft from existing 16 metres to 26.5 metres, berths will be constructed on a build-operate and transfer (BOT) basis. The berths to handle VLCCs is being taken up for use by Chennai Petroleum Corporation Limited (CPCL), the berths for iron ore will be used for handling iron ore from the Bellary amd Hospet region. The dredging of the port alone is expected to cost about Rs.300 crore and has to be approved by the government before it is taken up. The method for financing the dredging project is being presently chalked out based on various options.

Two bidders in race for Gangavaram project The bids for the Gangavaram port project, which closed in on May 27, has narrowed down to two potential bidders out of the four different consortiums, which had initialy shown the interest. The two bidders who have submitted their final bids include DVS Raju-led consortium comprising Dubhai Ports International of UAE, West Port Holdings SDN BHD of Malaysia and Jurong Consultants of Singapore and the second one led by Adani Exports with Adani Infrastructure Services and Adani Port Infrastructure. The final selection of the port developer is likely to be made by end-June. The State government had initiated the gobal bidding process for the Gangavaram project in September 2001, based on a feasibility study my L&T Ramboll Consulting Engineers Ltd, in association with ROGGE Marine Consulting of Germany. The project estimated to cost between Rs.1,500 crore to Rs.2,000 crore. The government has proposed a 33-year concession, including three years for financial closure and construction activity.

Colombo Port to launch volume-based discount scheme In an effort to boost traffic, the Colombo Port is launching a volume-based discount scheme targeted at both the shippers and shipping lines operating out of In­dian ports. The scheme aimed at attracting more shipping lines and shippers to transship contain­ers through the Colombo Port, is similar to the one launched earlier for shipping lines operating out of Far-East ports. Sri Lanka government has also announced that it plans to construct a new ter­minal called South Port of Colombo, which will be on the main shipping lane between the East and the West. At least 250 ships pass through this route every day, of which only 10 presently call at the Colombo Port. The new port will have dry docking and bunkering facilities too and is expected to cost $1.5 billion and will be constructed on the build, own, operate or build, own, operate, transfer basis. The Colombo Port presently has a capacity to handle 2.4 million TEUs, 1.9 million TEUs with the Jaye Container Terminal and the remaining 0.5 million TEUs with the South Asia Gateway Terminal (operated by P&O). In 2001, the port handled a total of 1.7 million TEUs, of which 5,50,000 TEUs were originating cargo and the remaining transshipment. Colombo Port is meanwhile, planning to launch a project to construct 12 more berths to handle container vessels at the South Port of Colombo.

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News on Shipping

INDAMEX to levy peak season surcharge After the rate restoration initiative (RRI) that saw the freight rates for the US-bound cargo move up recently, the INDAMEX conference has decided to charge a 13 per cent peak season surcharge on all containers heading for the US coast. The peak season, which commences from June 1 till September will see additional surcharges of $ 225 and $300 for 20 ft. and 40 ft. containers respectively. The freight rates on export containers, inclusive of terminal handling charges (THC) from India to US have gone up to $ 1500-1600 for twenty foot container and to $ 3,000 for a forty foot containers, following the 15 per cent in the wake of RRI. The INDAMEX consortium includes lines like the SCI, Contship Containerlines and CMA-CGM, which offer fixed day weekly direct service between the Indian sub-continent and the US East coast.

Shipping movements unaffected by Indo-Pak tension The movement of ships has not been affected so far despite weeks of tension over Indo-Pakistan war. While precautionary steps have been taken by authorities, which require all shipping companies sailing into and out of Indian waters to report their voyage plans and positions to the maritime administration, there has been no directives affecting the normal movement of vessels till date. The office of the director general of shipping has however, issued a alert notice on May 20, which seeks to remind the ship owners that DG Shipping reserves the right to prescribe and change the course of the ships, if so required. The powers of the DG Shipping have however, not been invoked so far and are only pre-cautionary in nature. However, uncertainties in the wake of war-like situation has made government insist on security clearance of the bidders involved in the ongoing disinvestments in Shipping Corporation of India (SCI)

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News on Shipyards

HSL to enter into OPV vessel repair segment Hindustan Shipyard Limited (HSL) is planning to once again commence operations in the offshore platform vessel (OPV) segment to further broad base its ship repair portfolio, which is also the single largest contributor to its revenue stream. HSL was producing OPVs until the early nineties for the ONGC and has the requisite infrastructure to handle its repairs as well. The ship repair business is expected to contribute about Rs. 100 crore to the revenues of the ailing shipyard, which has not been able to book any new ship building orders in the last couple of years. The company is currently only building a 750-passenger vessel and 10 other smaller vessels, capable of ferrying 100 passengers each for the Andaman Nicobar Island administration. One of thee vessels has been delivered and the total value of shipbuilding contracts is about Rs.250 crore.