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In India it takes anywhere between 10 to 15 years till a unit is generated: Capt K.P.Rajagopal

Your company is developing a green field port in Port Novo near Cuddalore, at fifteen million ton capacity A string of thermal plants including a mega power plant at Sirkzhi by Neyveli Lignite Corporation  were planned a few years back but most of these projects have been put on backburner. With industrialization in Tamil Nadu taking a back seat and increased dependence on renewable energy like wind and solar energy, what is the future of thermal plants in the region?

Our Port would be a captive facility when built and we would build it in phases as per the requirement of our group’s Power Plant, which is producing 1200 Mw presently and likely to expand to 3600 Mw in phases.  Therefore we do not see any risk there.

The Thermal Power sector has been a neglected child of the past 2 governments. There was a big lull and the country was reeling under Power shortage for over a decade and then suddenly scores of Thermal Power Plants were built and many came on the stream simultaneously. In India we need to understand that it takes anywhere between 10 to 15 years (from the time Land acquisition for a project starts) till a unit is generated. This is abysmally pathetic, but that is our record on date. We tend to be in consonance with troughs ie high demand and no generation on one hand and with the Peaks ie Low Demand and high production capacity on the other hand. Such kind of a synchronization is rare and we seem to have achieved that distinction. This happens due to the huge lag in planning and execution of Projects (often 5 to 10 years), resulting in huge cost hike and culmination in the above explained grotesque phenomenon. Whole of 2016 & 2017 at least 50,000 Mw remained unutilized, increasing the NPA’s in the Power Sector.

Now it appears that we have turned a corner, and the demand seems to be on the rise. Hopefully the unutilized capacity would be taken up.

There is no going back on our Renewable Energy Targets. Though it’s a big task to get to 175 Mw of renewable power by 2022, we are in the right direction. This by no means would challenge Thermal Power for the next 2 to 3 decades. As we speak we are likely to commence work on the much awaited 1320 Mw supercritical thermal power project (TPP) at Udangudi in Thoothukudi district.

Power Grid Corporation is on the job of synchronisation of all regional grids which will help in optimal utilization of scarce natural resources by transfer of Power from Resource centric regions to Load centric regions. Further, this shall pave way for establishment of vibrant Electricity market facilitating trading of power across regions.

3. Tamil Nadu has been pioneer on Coastal shipping of coal having established the Poompuhar Shipping Corporation way back in 1973. With both the ships of the Corporation likely to be discarded due to age factor this year, what do you think is the future of the Corporation?

Tamil Nadu truly in the real sense has been in the forefront of Coastal Shipping for over 3 decades and Poompuhar Shipping Corporation has been at the center of it. Though it would have been desirable for Poompuhar to continue to be a Ship Owning Company, Poompuhar has long since been the chartering arm of TANGEDCO to charter in bulk carriers for the coal transport from Haldia/Paradeep to Ennore/Tuticorin and the chartered  tonnage has been 10 times the owned tonnage and hence Poompuhar will not miss being a Ship Owning Company. 

It would do a lot of good if Poompuhar recruit professionals and bring in best industry practices in its working and be truly independent of political interference.

4.Will chartering of private vessels by TANJEDCO to carry coal from Paradip to Ennore and Tuticorin ports in the absence of their own vessels prove to be an expensive proposition for the state owned company?  Should PoompuharShipping Corporation buy ships taking advantage of lower prices in the international market and continue with its forty year old operations?

The Cabotage law is in operation in India. All Chartered in Vessels by Poompuhar are Indian tonnage and many a times foreign tonnage was chartered in when Indian tonnage was not available. In the last 10 years with the prevailing low sea freight, Charterers have had a big advantage. In the last few months, the freight rates are showing a small northward movement, but that does not affect Poompuhar much as most of the charters are locked in for a year at least. The performance of Poomphuhar  as a ship owning company, has not been good and has been a drain. Therefore unless the Corporation is given full independence, it may not be a good idea to go in for new building orders now. The second hand market too has bottomed out in 2017 and has turned around.  It may be a better idea to get other Indian Ship Owners to invest and take their vessels on long term charters with built in safeguards against uncertainties.

You have signed an MOU with Tamil Nadu Maritime Board for development of Port Novo captive port. What has been progress of the Project?

We are at the Design and Engineering stage and would soon commence constructions after getting all the required permissions from relevant authorities.

You have also talked in terms of providing Coal logistics in Cuddalore to the tune of 4.5 million tons a year, Can you elaborate?

The Port to be built at Paragepettai would have a capacity to handle 4.5 MMTPA for the captive requirement of our group’s Power Plant in the same location.

Between Cuddalore and Nagapatinam, a number of captive ports have come up in the last twenty years. Now that Bharat Petroleum Corporation has evinced interest in taking over the Nagarjuna Petroleum”s long pending refinery and the Indian Oil corporation’s proposal to expand its existing refinery in the Cauvery basin, What kind of down-stream industries are likely to come up in the area?

That’s not correct. Between Cuddalore and Nagapatinam, there is only one big  operating Port and that’s Karaikal Port, which is a common Port.  The Chemplast Port at Cuddalore, at Karaikal and the CPCL facility at Karaikal are for captive purposes. The Paragepettai Port would be the yet another Port (apart from the Cuddalore minor Port, which in its present state is handling no cargo) and that would be a captive facility too. Therefore there is really no overcapacity at present.

If Nagarjuna’s facility does get revived, it may be of interest to see whether the new management would decide to construct a new Port or use existing Ports in the vicinity. The Cargo being petroleum, laying pipe lines from existing ports in the vicinity would bring the capital cost down and make the project more viable. The same argument goes for IOC refinery expansion in the cauvery basin.  

Coastal shipping in India has not taken off despite concessions offered by several ports. They include Exclusive berths for coastal cargo and priority berthing for coastal cargo. You had raised the issue at a seminar few months ago about the problems encountered with Customs and Immigration. I am told immigration authorities have different sets of rules for different ports. Can you elaborate?

Transportation of Goods within India is done through Road, Rail, Coastal shipping andby Air. In all of this, Ports (major ports)& Airports are, expensive pieces of infrastructure, built for purpose and domestic cargo handling is incidental and no additional capital is spent for same while building Ports and Airports. Ports thrive on import & export cargo and Airports on Passenger traffic. However that’s not the same with Roads and Railways.

Road infrastructure is built with 80 per cent weightage for freight movement and Railways infrastructure is built with a 50 per cent weightage for freight movement. Therefore the capital spent in Road and Rail for freight movement (read domestic cargo) is very high, yet that cost is not apportioned to the cost of carriage of freight. The cost of freight is merely based on the cost of vehicles that carry the freight. The Capital cost is borne by the state. In today’s world the cost of accidents, the environmental cost when freight is moved by Road / Rail are in itself a major disincentive, not to mention the capital cost which is humongous. 

Whereas when domestic cargo is carried on the coast, there is a minimum of 2 Port interfaces and at both these ends the cost levied include a part of the capital spent in creating the infrastructure. This is an unfair practice. Also the domestic cargo operators should be allowed to use own labour/equipment for cargo handling to bring down cost instead of bracketing the stevedoring cost with import/export cargo handling.

Most of the Major Ports (well interspersed geographically) has additional infra and capacity available and can create a “Domestic Corridor” within the Port. It is possible to use technology to secure the cargo to move only through that domestic corridor, thereby assuring Customs that there would be no malpractices. Domestic cargo should move smoothly without any interferences from Customs, with minimum documentation which could be filled once on line without any additional requirements. Same applies to Immigration. Domestic flights within India does not have to seek immigration clearance at each Airport and same should apply for coastal shipping.

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is an international organisation of seven nations of South Asia and South East Asia, housing 1.5 billion people and having a combined gross domestic product of $ 4 trillion.  India should strive to bring the BIMSTEC member states—BangladeshIndiaMyanmarSri LankaThailandBhutan, and Nepal under coastal shipping to increase the chances of cargo in both direction (to & fro) to reduce cost.

Since we have no Coastal Ships in any numbers to talk about, the Government may offer innovative incentives either to the domestic cargo interest or the coastal ship operators to invest and move cargo by water. This will be in the interest of nation building. 

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