Transcript Document

Indian Ports – Key Sector Trends
21st January 2010
This presentation
• Trends: major and minor ports, commodities driving
growth, view on capacities
• Outlook: things are looking up
• Constraints: old; more pressing; and some emerging
caution points
2.
Traffic Snapshot (2008-09)
800
• Port Traffic grew at 10% between
2004-05 and 2008-09
– Traffic at minor ports grew at
~14.2%, ~8.5% for major ports
Traffic growth
700
231
600
171
500
136
400
300
– Commodities: dominant share of POL,
followed by IO, containers and Coal
– Growth in Major port traffic since
2004-05 driven by Containers (CAGR
14.6%), POL (CAGR 8.6%)
• Traffic growth for Major ports for
Apr-Dec 09 vs. Apr-Dec 08: 5.4%
• Capacity utilization levels peaking
for major ports: ~95%
– Minor ports utilization at 68%
200
383
100
0
2004-05
2006-07
Traffic at Major Ports
Others
2008-09
Traffic at Minor Ports
Composition for 2008-09
POL
Cont.
Coal
3.
530
463
Iron Ore
Recent developments – select projects
Select recent projects
and expected
dominant
commodities
• Recent capacities added to minor ports
•Dominated by bulk capacities on the east
coast
Dhamra: IO & Coal, 2009
Gangavaram: Coal +, 2008
Krishnapatnam: Coal, IO,
2008
Karaikal: Coal +, 2008
4.
Select upcoming projects
• Large capacity expansions underway: projected addition ~ 700 MT
– Expected both for major and minor ports (18 and 20 planned projects resp.)
– Key drivers: Coal imports for power gen, container demand
– LNG capacities expected in western ports on the back of improved gas grid
• Confidence wrt. projects coming up
– Projects at major ports are at advanced stages of development
– Many minor ports projects at existing ports and capable developers
Mundra: Coal; SPM
Dahej: LNG jetty
Mum: Offshore cont. (Gammon +)
JNPT: 4th cont. term.
Dighi: Coal & cont.
M’goa: Coal & IO
CONTAINERS
BULK
5.
Valarpadam:
Cont. - dev. by
DP World
Paradip: Award of IO and
coal terminals
Krishnapatnam: Phase 2 exp
Ennore: Coal terminal
Chennai: 2nd
cont. terminal
(PSA Sical)
Outlook: Project flow expected to look up
• Investments have been already happening on minor ports
– Strong minor ports capacities in Gujarat; AP and Orissa are catching up
• Projects flow for major ports has been subdued for various
administrative reasons
– Delay in finalization of new MCA
– Time taken for clearing tariffs for new projects as per 2008 TAMP guidelines
• But projects flow is looking up
– Recent awards at Paradip, JNPT 4 under bidding
– The PPPAC approved 8 projects during Oct 08 – Nov 09 with expected
project costs of INR ~ 11 thousand crores
– 4 projects for INR 4,179 crores under consideration
6.
Outlook: Ports to continue to witness strong growth
• From 2008-09 to 2013-14 CRISIL expects traffic to grow at CAGR of 8.9%
to 1167 million tonnes
– Major ports expected to grow at CAGR of 4.9% while minor ports at 16.3%
– Traffic growth likely to be driven by coal (CAGR:14%), followed by containers
Current and expected commodity shares
7.
Minor ports: growth in share to continue
• Consistent growth in market share: Traffic share grew from around
25% in 2005-06 to ~ 31% for 2008-09
• Majority of recent capacities in minor ports
• Rise in expected share beats past forecasts
Share in traffic expected to
grow to 42.2% for 2013-14
Expected share in Capacity
at 36% as per 11th Plan
1200
1000
800
36%
600
400
64%
200
0
2008-09
8.
Major Ports
Minor Ports
2013-14
Capacity utilizations to ease
Current and expected capacity utilizations
2008-09
2013-14 (P)
Major ports
~95%
~74%
Minor ports
~68%
~72%
• Overall utilization levels would come down from the present
~85% to ~73%
9.
Issues
• Many old constraints remain
– Draft constraints at major ports, below par efficiency levels, poor hinterland
connectivity, delays in environmental clearance
• Bringing bankable projects to market still the biggest hurdle
– Reliance on private investment for capacity ports dev. is huge: ~USD 14 Bn
– Poor project preparation, unattractive packaging lead to delays at
procurement and post award stages
– Some minor port projects have highlighted systematic gaps in site selection:
environmental issues, unfavorable soil conditions etc.
– Administrative, policy change issues
10.
Concerns / Caution points
(Observations from recent projects)
• Qualification criteria for bidding in major ports favoring a few large
players
– Selection of only top 5 technical bids may lead to adequately qualified firms
being out of competition - same firms being selected for different projects
– Large intl. players that bring qualification points are not necessarily investors
– The top 5 selection criteria has been done away with for the roads sector
• Differential royalty structure in minor ports adversely impacts the
economics of new port developments
– Operational ports already have a first mover advantage
– May delay investments / reduce competitive position of newer developments
• Fast paced reform of domestic coal mining may multiply the coal
production in India
– Thermal coal is the backbone of investment thesis for bulk ports
– Domestic coal may simply replace the imported coal for power generation
11.
Summary
• Traffic flow has started to look up after a brief depression
– Growth will be lead by coal and containers
• Trends from traffic and capacity addition expectations
– Trend towards minor ports gaining market share will continue
– Capacity utilisations shall ease, balance in favour of minor ports
– Investments and traffic flows for the eastern cost to be driven by bulk
(esp. coal); mixed for western coast
• Sector is poised for growth and investments
– Many minor ports are sitting on potential for capacity ramp up and have
robust development plans, major ports projects flow will go up
– Hinterland connectivity constraints and other issues however will need
to be managed
12.
CRISIL Risk and Infrastructure Solutions Limited
A Subsidiary of CRISIL Limited, a Standard & Poor’s company
13.
www.crisil.com
Opportunities exist for Brownfield expansions at Major Ports and
Greenfield Minor Port Ventures
• The 11th Five year plan aims to more than double the existing port capacity to 1575
MTPA
• Major Opportunities exist in
– BOT expansions at Major Ports (ROCE in the range of 14%-16%)
 JNPT-IV Container Terminal
– High Degree of Certainty on Port Traffic: serves industrial western region and landlocked North India
– Presence of entire logistics chain
 Ennore & Chennai Container Terminals
– Shall play a leading role in Intra-Asia trade
– Ennore preferable to Chennai as Chennai has land constraints and may face congestion issues
 Tuticorin Container Terminal
– Shall serve the Central Tamilnadu Industrial Cluster
– Presently facing some tariff fixation issues
– Greenfield Private Service Ports (ROCE in the range of 14%-20%)
 A large number of Concessions have been awarded on East as well as West Coast
 However, locational studies would yield 3-4 strategically located ports, alternatively secondary
acquisitions can be looked at.
– ICDs/ CFS
 Relatively smaller investment and serve as a traffic aggregator for owned ports
14.
Short term GDP forecasts looking up
7.5
7
6.5
6
5.5
5
4.5
4
3.5
3
Mar-09
Apr-09
May-09 Jun-09
Jul-09
CRISIL
15.
Aug-09 Sep-09 Oct-09
IMF
ADB
Nov-09 Dec-09
PPPAC - Proposals Granted Approval
1
2
3
4
5
Construction of Deep draught iron ore berth on
BOT basis by Paradip Port Trust
Port (Department of
Shipping)
Orissa
Construction of Deep draught coal berth on BOT
basis by Paradip Port Trust
Port (Department of
Shipping)
Orissa
Development of Eighth Berth as Container
Terminal on Build Operate & Transfer (BOT)
basis at Tuticorin Port
Port (Department of
Shipping)
Tamil Nadu
Construction of Container Terminal at Ennore Port
in Tamil Nadu on BOT basis
Port (Department of
Shipping)
Tamil Nadu
Development of a Coal Terminal at Port of
Mormugao, Goa on Design, Build, Finance,
Operate and Transfer (DBFOT) Basis
Port (Department of
Shipping)
Goa
591.35
-127.34
497.01
-103.15
312.23
-67.23
1407
-302.97
334
-71.92
Sub-Total
Proposal approved
on 23.10.2008
Proposal approved
on 23.10.2008
Proposal approved
on 13.01.2009
Proposal approved
on 13.01.2009
Proposal approved
on 13.01.2009.
3141.59
3683.25
-793.12
S.
Name of the project
No.
Sector
State
(Sponsoring
Authority)
Project cost
Remarks
in Rs. Crore
(in US$, Million*)
1
2
3
Development of Standalone container handling
facility with a quay length of 300m towards
North at Jahawar Lal Nehru Port Trust
Ports (Ministry of
Shipping)
Maharashtra
Mechanism of Coal Handling facilities and
upgradation of General Cargo Berth at Outer
Harbour of Visakhapatnam Port to cater
200,000 DWT vessels on DBFOT basis
Ports (Ministry of
Shipping)
Andhra
Pradesh
Development of Fourth Container Terminal at
Jawahar Lal Nehru Port Trust
Ports (Ministry of
Shipping)
Sub-Total
600.08
-129.22
438.36
Proposal approved
on 11.11.2009
-94.39
Maharashtra
6700
-1,442.72
7738.44
-1,666.33
16.
Proposal approved
on 11.11.2009
Proposal approved
on 11.11.2009
PPPAC - Proposals Under Consideration
S.
Name of the
project
Sector
1
Development of
Container
Terminal at New
Mangalore Port
on BOT basis
Ports (Ministry of
Shipping)
Karnataka
275.82
2
Development of
Multipurpose
Berth to handle
clean cargo
including
containers on
BOT basis at
Paradip Port
Ports (Ministry of
Shipping)
Orissa
445.51
3
Development of
North Cargo
Berth II for
handling bulk
cargo at
Tuticorin Port on
DBFOT basis
Ports (Ministry of
Shipping)
Tamil Nadu
332.16
4
Development of
Mega Container
at Chennai Port
Ports (Ministry of
Shipping)
Tamil Nadu
3125
No.
Sub-Total
17.
State
(Sponsoring
Authority)
Project cost
in Rs. Crore
4178.49
Distribution of traffic – Major Ports
18.
Source: CRISIL Research