A few days ago, the performance of Haldia Dock (under Kolkata Port Trust) as well as the progress of projects in the pipeline was reviewed at a high-level meeting at Haldia presided over by the Union Minister of State for Shipping and attended by senior officials of the port.
There was little to cheer about the performance, it was revealed at the meeting. The traffic throughput so far in the current fiscal has been lower by around 10 per cent vis-à-vis the same period last year.
While iron ore is considered the major villain, the throughputs of a few other cargoes too leave much to be desired. Thus, there has been nearly 50 per cent drop in crude and another 10 to 11 per cent drop in coking coal imports.
Causes for drop
In fact, the overall drop in traffic cannot be explained entirely by the slump in the global economy. For example, the crude throughput has declined because Indian Oil's Barauni and New Bongaigaon refineries, thanks to technical upgradation, are no longer processing as much Rava crude (imported through Haldia) as before.
These refineries are now depending more on crude imported through Paradip and transported via the Paradip-Haldia-Barauni-New Bongaigaon pipeline, bypassing the Dock.
Next, the improved availability of railway rakes this year has reduced the requirement of barge movement of imported coking coal between Vizag and Haldia by SAIL and between Paradip and Haldia by Tata Steel. Such movement took place on a big scale last year.
Also, the drop in iron ore export is believed to have been caused partly by the slump in global demand and partly by the poor availability of the ore due to restrictions imposed on mining in major iron ore producing areas by the respective state governments.
However, a few other issues also merit consideration. These include the poor navigability of the Hooghly river preventing large bulk carriers with sizeable parcel load to call at Haldia port, uncertainty over the proposed trans-loading facility and the present railway freight policy offering concessions on long-distance haulage.
The river navigability is a natural phenomenon which defies easy solutions, as it is being realised the hard way by the Union Government.
The Centre spends hundreds of crores of rupees every year on maintenance dredging in the Hooghly with deployment of several Dredging Corporation of India vessels but with no signs of tangible improvement in draft. If at all, the draft is declining — causing concern to port authorities, the shipping lines serving the Dock and the trade.
This naturally has raised the question at various levels whether the government should continue to “sink funds in a bottomless pit”. The issue of shore disposal of the dredged spoil is critical in this context.
But then shore disposal as opposed to the present system of dumping the spoil in the river itself, though interesting, is beset with some problems. First, the disposal ground has to be identified on the shore and land has to be acquired, and second, every time the dredger stops dredging and veers towards the shore for disposal, the effective dredging time is lost.
This naturally prompted the authorities of Kolkata Port Trust (KoPT) to look for a closer-to-the-sea location which will be free from the navigability problem.
Thus the concept of transloading operation emerged and Kanika Sands, an island off Odisha coast , was identified as suitable for undertaking the operation but not without throwing up a good deal of controversy.
The Shipping Ministry issued notification extending the limit of Kolkata port but the Odisha Government took exception to it. The result: the Shipping Ministry, KoPT and the Orissa Government are now locked in a legal battle over whether KoPT could really undertake the operation at the identified location.
Railway freight
Let us now turn to the asymmetry in railway freight. The rail freight for transportation of one tonne of iron ore for export from Barbil to Haldia (395 km) is Rs 2,842, from Barbil to Paradip (660 km) is Rs 2,879 as against Rs 3,265 from Barbil to Visakhapatnam (1,071 km) and Rs 3,295 from Barbil to Gangavaram (1076 km). Thus, the distance from Barbil to Visakhapatnam/Gangavaram is more than twice that between Barbil and Haldia but the freight differential is not as much, it is small.
The location advantage of Haldia, that is its proximity to mines, is not reflected in the railway freight.
As for new projects, the proposal for a new port at Saugor Island is in conceptual stage. For Diamond Harbour container project, the RFQs have been invited. For Haldia Dock II project at Shalukhali, about 30 bidders have responded to the RFQs and the port authorities have approached the regulatory authority for necessary approval.
In other words, it will be at least another two to three years, if not more, before the project is ready for operation.
What happens to Haldia till then?
Perhaps an out-of-court settlement paving the way for some sort of transloading at the Odisha's private ports, also benefiting KoPT, might provide the answer.