Thursday, 25 February 2010

Industry Snapshots

Platinum-II controversy in Supreme Court, as the Gujarat State Government’s attempt to declare it a wreck and move it is challenged by Gopal Krishna of the NGO Indian Platform on Shipbreaking. IPoS has filed a petition in the Supreme Court, asking that the ship be sent out of Indian waters as it was toxic and laden with asbestos. In addition to demanding a full enquiry into how the Platinum II was allowed into Indian waters in the first place, IPoS has asked for full details from Alang on the 5,000 or so ships that have been dismantled there since 1982. The Platinum-II reached Alang in suspicious circumstances in October last year and immediately stirred up a storm amongst environmentalists, who called it a toxic ship that should not be allowed to beach at all for breaking. The Union Ministry of Environment & Forests then sent a committee that confirmed, after investigation, that hazardous material was on board the ship; the MoEF banned the ship’s dismantling at Alang. Around a month later, in a move that made the environmentalists cry foul, the Gujarat government wrote to the ministry that the ship would be removed off the Gopnath coast as it was a wreck; they did not specify where they wanted to move the ship. The ship continues to lie at Alang with the alleged support of the politically powerful shipbreaking lobby. Ironically, the US Environment Protection Agency (EPA) had fined the Platinum-II’s last owners $518,500 for exporting the ship for scrap without removing toxic substances like asbestos from the ship.

Vallarpadam plans to take on Colombo. In an attempt to gain market share for the upcoming Vallarpadam Container Transhipment Terminal, the Ministry of Shipping is planning to take on Colombo, where more than 90% of Indian cargo goes for transhipment. Plans are afoot to make port charges and connected fees at Vallarpadam on par with the Sri Lankan port. Mr K. Mohandas, Shipping Secretary, confirmed this to the Hindu’s Business Line on the sidelines of a workshop on National Waterways Development. The Ministry, he said, “is aware that port related charges currently collected by Colombo Port are far below Kochi, and it is working out proposals for attracting mainline vessels to the proposed terminal, which is expected to be commissioned by June end.” Although some plans like four lane highway connectivity to the port are behind schedule, rail connectivity has made good progress, according to the Secretary, and that the important works planned towards the LNG Terminal will be completed on schedule early next year. Market watchers say that the port charges in Colombo are almost a third of those at Indian ports and something needs to be done urgently to make Indian ports competitive. Some point out that the Vallarpadam move may well spark a price war with Colombo, to the detriment of both.

Indian port growth slow because of underutilised funds and delay in awarding port projects. "The government had an ambitious target of completing Rs 500 billion worth of port projects by 2012. But only projects worth Rs 120 billion were awarded. A substantial proportion of port projects worth Rs 380 billion are still to be awarded," says Jose Paul, former acting chairman of JNPT and former chairman of Mormugao Port Trust, as quoted in the media. In other cases, it looks like an increased allocation of funds is not working too well, with ports unable to utilise them appropriately and quickly enough. The fund utilisation rate fell from around 69.4% in 2006/2007 to just 64% last year. Worse, it is at a dismal 36.4% in the current fiscal year until now. Observers say that this is nothing new: an earlier committee appointed by the Planning Commission had remarked, in an appraisal report, that it was dissatisfied with the then Ministry of Shipping. “The committee is of the view that the reasons given by the MoS for delays etc are not of such nature that are beyond its control,” the report had said at the time.

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