Sucheta Dalal :DP World has ambitious plans but will it land up in a dry dock?
Sucheta Dalal

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DP World has ambitious plans, but will it land up in a dry dock?  

May 14, 2010

 DP World is proclaiming that it will attract cargo to India from other international ports like Colombo. However, the Vallarpadam terminal, being developed by DP World on a public-private-partnership (PPP) model, could face some initial hitches before kick-starting operations.


Dubai-based DP World, one of the largest marine terminal operators in the world with 49 terminals, is the private operator set to run the terminal at Vallarpadam at Kochi port in India. The port is being developed as a trans-shipment hub on a PPP model. The project involves a total investment of Rs2, 200 crore, with an investment of Rs1,000 crore by the Indian government and Rs1,200 crore by DP World.


The first phase of this terminal was earlier to be commissioned by June 2010. The new date is around July 2010. “The Vallarpadam terminal has been delayed a bit; we are talking of end-July 2010 from the earlier June 2010,” said Anil Singh, senior vice president & managing director (subcontinent), DP World Private Limited.


Mr Singh stated the reason for delay was the movement of equipment that is likely to be completed in this month and thus, the first phase is likely to be commenced by July 2010.


However, another major issue that the terminal could face is the Indian cabotage policy. DP World had requested the government certain changes in the policy in order to make the terminal competitive with international ports. Relaxation in the cabotage policy is expected to bring more trade to Vallarpadam and other major ports in India.


“The recommendation is with the shipping ministry right now. Till now, I don’t hear any new developments on that side,” said Dr Satish Balram Agnihotri, joint director general, department of shipping. Any relaxation in the cabotage policy is likely to receive strong opposition from Indian shipping companies. However, supporters of the Vallarpadam project argue that the relaxation would be a win-win step both for the port and the shipping companies.


Though DP World plans to commission the project in July 2010, operations at the terminal can start only once the necessary contracts are signed with the respective clients. However, the company has not signed any contracts at present, as it is awaiting relaxation in the cabotage policy.


“Yes, that is true (we would sign contracts once the decision on the cabotage policy is taken). We are waiting for the policy and then we can take a position on that (the contracts). We haven’t heard anything from the government,” said Mr Singh.


DP World officials claim that the new trans-shipment hub will help attract around a million tonnes of cargo to India. “This will help bring back India’s cargo from ports like Colombo and Jebel Ali,” said Mr Singh in a presentation made at a Confederation of Indian Industry (CII) conference on coastal shipping, a few months back. — Amritha Pillay

-- Sucheta Dalal