Trying to escape all envious eyes at work, given that word had spread about me being sent to Goa on an official tour, that too in late December, I booked myself on the first available flight to Goa’s Dabolim Airport. On agenda, among other things, was to do a health check of Mormugao Port – a major port that has fallen on hard times because of a Supreme Court ban on iron ore mining
Sisir Pradhan | The Dollar Business
The visit to Mormugao was a bit unplanned. But despite the paucity of time, and even though Goa was already fully into Christmas spirit, all appointments with Mormugao Port officials were fixed in a matter of days. Maybe, Santa was smiling on me. So, here I was in Mormugao, at a time when the port was trying to put the worst – induced by a Supreme Court ban on iron ore exports – behind it and fast rolling out expansion plans. While driving towards the port, I recollected my last visit to the state in 2011, when all one saw on the national highway was serpentine queues of trucks and lorries carrying iron ore. I remembered how I had seen many large barges on even Zuari and Mandovi rivers and had felt as if Goa’s beauty had been hijacked by the mining sector. That was before the Supreme Court ban.
Shadow of the past
Post-iron ore export ban, Goa is cleaner and quieter. And so is business at Mormugao Port. The first hint of this, even before I entered the port premises, came from the highway sans trucks and empty barges lying idle of the banks of Zuari. Just how severe the impact of iron ore export ban on the fortunes of Mormugao Port has been can be gauged from the fact that while in FY2011, the port had handled 50.02 MMT of traffic, in FY2014, it handled just 11.74 MMT of traffic! Unfortunately, the buoyancy in the economy, after the formation of the new government at the Centre, has managed to bypass Mormugao. Robert, owner of a barge-making and operating company, with more than a bit of sarcasm, told The Dollar Business, “For us, there are no achhe din. Every day, we are struggling to keep our business alive. We have taken huge loans to stay afloat. Goa Barge Owners’ Association had approached the previous UPA government and has approached the current NDA government for help. But none has come to our rescue.”
Looking at the decline in Mormugao Port’s performance since the ban on iron ore exports, one can’t but think how on earth neither did the government, nor port officials saw this coming. How could they not see the risk of betting everything on just one commodity? But hindsight is a wonderful thing, isn’t it?
Despite Mormugao Port’s current sorry state of affairs, there is no denying the key role it has played in India’s international trade. Being strategically located approximately 370 km south of Mumbai and 575 km north of Cochin, Mormugao is an open harbour, protected by a breakwater and has an entrance channel with a depth of 14.4 metre and width of 250 metre. The construction of Mormugao Port started in 1885 by the West of India Portuguese Guaranteed Railway Company (WIPR), during Portuguese rule in Goa, followed by commissioning in 1888. The port owes its origin to the Treaty of Lisbon, signed between the British and Portuguese governments in 1878.
During the initial phase of construction, WIPR, apart from building the port, built a quay wall up to berth no. 3, 1,176 feet breakwater and a metre gauge railway line from Mormugao to Sanvordem. Since then, the port has been continuously adding new infrastructure, including a mechanical ore handling plant (MOHP) owned by Chowgule & Co., built in 1959, that has a rated capacity of 600 TPH. After the merger of Goa with India in 1962, the administration of the port was taken over by the Government of India and the main railway line from the port to Vasco-Da-Gama, popularly known as just Vasco, was handed over to South Central Railway. Later, in 1963, the port was declared a major port under the Indian Ports Act, 1908.
With changing times
Following the sanctioning of major developments at the port in 1970, an oil berth (berth no. 8) was commissioned in 1976 and a dedicated berth for handling iron ore (berth no. 9), equipped with MOHP, was commissioned in 1979. Large scale dredging and reclamation work was also taken up as part of this project. Further, in 1985, a multipurpose general cargo berth (berth no. 10) was commissioned. Also important in the port’s timeline is the year 1992, when berth nos. 1, 2 and 3 were decommissioned and handed over to Western India Shipyard Ltd., for constructing a modern ship repair facility, with a floating dry dock. This facility was commissioned in 1994.
The MOHP built by Chowgule and Co., at berth no. 6, was also decommissioned in 1992 after nearly 33 years of service. In 1994, the port added another multipurpose general cargo berth (berth no. 11). Similarly, in 1999, while berth nos. 4, 5 and 6 were decommissioned, the port signed a concession agreement with ABG Goa Port Ltd., for constructing and operating two modern bulk cargo berths (5A and 6A), in lieu of the decommissioned berths. In addition to these, the port has also constructed three mooring dolphins, which were commissioned in 2003 for handling bulk cargo. There are also four privately-owned trans-shippers, operating in the port’s waters. A shallow drafted berth (berth no. 7) is also available and primarily caters to shipment of coastal cargo.
Mormugao Port’s love affair with iron ore started after World War II. With Europe requiring large amounts of steel for reconstruction, Mormugao was the port of choice for several Indian iron ore exporters. However, with depressed iron ore prices in the international market and several restrictions by the Supreme Court on mining, Mormugao Port is now focusing on other cargo as it tries to position itself as a multi-commodity port. So, while it has dedicated berth no. 5 to handle general cargo and berth no. 6 has been made a dedicated coal berth, berth no. 7, commissioned in June 2014, also handles coal and has a capacity of handling of 5 MMTPA. The port has also registered imports of wood chips, which is a major raw material for the paper industry.
The most interesting development at the port, however, is an under-construction ultra-modern cruise terminal, being built at a cost of Rs.8.79 crores, in order to cater to the tourism sector and attract foreign tourists. Expected to be completed by December 2015, the terminal building will have all modern facilities such as cafeteria, lounges, Wi-Fi connectivity, foreign exchange counters etc.
For the future
Container movement throughout Indian ports has been growing at about 10-12% and is expected to continue to grow. The growth in container traffic is also being experienced at ports like Mormugao, where, traditionally, container volume has been low. To facilitate this, Mormugao Port, in partnership with the state government and National Highway Authority of India (NHAI), is planning to develop a four-lane highway, which could shoulder the burden of increased container movement between it and ICD Verna. One of the main motivations behind building this road is to enable container carriers bypassing Vasco City, since the existing highway, leading to the port, passes through the city, which has led to certain restrictions on the plying of heavy vehicle in and out of the port.
Mormugao Port officials have also been working hard to improve other infrastructure. A couple of months back, a project management team was formed to implement projects at a faster pace and market the port to attract new customers. According to Mormugao Port’s Traffic Manager Jerome Clement, the port has taken many initiatives to improve its performance and the results are already visible, with it recording the highest growth in traffic, although at a very low base, among all major ports in H1, FY2015. Speaking about another initiative that might start showing results soon, Clement said, “Since Mormugao Port was designated for import/export of pharmaceutical products, an office of the Assistant Drug Controller has been established at the port.”
Even in terms of efficiency, things are starting to look bright. For example, the average pre-berthing detention time of vessels at the port during H1, FY2015 was 9.19 hours, as compared to 10.45 hours in FY2014. Similarly, while the average turnaround time in FY2014 was 2.92 days, in H1, FY2015, it has come down to 2.60 days. With Mormugao Port’s performance starting to turnaround, port officials are doing all they can to increase its cargo handling capacity. As part of such expansion plans, the port is expected to award projects for construction of two general cargo berths by February 2015.
For better times
Leaving Goa after spending just a couple of days is always very difficult. But this time was especially difficult, not only because Goa was already in full festive mood, not only because the roads are cleaner, not only because the highway is freer, not only because Zuari is not chock-a-block with barges, but because Mormugao Port leaves you with a gloomy feeling. For, its fortunes have dipped, only because of some unscrupulous elements in the coal sector. But given the fervour with which Mormugao Port officials are trying to position the port as a multi-commodity port, one is more than confident that achhe din are not too far. All it needs urgently is some kind of a fulcrum.
“It was a mistake to depend only on one type of cargo” - Cyril C. George, Acting Chairman, Mormugao Port Trust
TDB: How did your journey in the port sector begin? Did your experience in handling labour issues at Kandla help you in Mormugao?
CCG: I started my professional career as a labour officer at Kandla Port Trust in 1989. Later, I became the Deputy Chairman of Kandla Dock Labour Board. Following my stint at Kandla, I joined Cochin Port Trust as the Secretary and spent eleven years there. I joined Mormugao Port as Deputy Chairman in March 2014. I have been the Acting Chairman of Mormugao Port since August 1, 2014. I am a core port cadre officer. Most of the Chairman and Deputy Chairman posts at major ports are held by civil servants, but there are certain posts that have been earmarked for port cadre officers.
"We are aggressively trying to attract different varieties of cargo"
Labour situation in the port sector is a very critical area. Ports are labour intensive units. My experience of working with trade unions has helped me deal with such issues in a constructive way, wherein most of the cases have been resolved by taking all stakeholders into confidence.The reason behind many incidents of confrontation between port management and labourers in various ports is because people, who are neither qualified nor experienced, are dealing with such cases. Those who deal with labour issues, at times, don’t have knowledge or experience regarding labour law related legal proceedings and hence, sometimes, unions take advantage of this.
TDB: The government is encouraging private investment for infra development at major ports. However, due to PPP projects, a number of labour related issues are also coming to the fore. Since a large number of PPP projects are lined up for Mormugao Port, how prepared are you to deal with them?
CCG:There are not many labour issues at Mormugao. Yesterday (Monday, 15th of December, 2014), there were some disputes in the flotilla section (fleet of tugboats that help vessels in berthing) wherein workers didn’t turn up during their duty hours. Some restrictive practices were going on in that section. Hence, only two shifts were working in a day, i.e., 12 hours each. This meant a compulsory overtime of four hours each, which amounts to a huge sum of extra payment to the workers. I had several rounds of meetings with the union where I told them that we needed to streamline the practice, else the port will not be in a position to stay in business. I told them that when the port is battling a severe financial crisis, it is not possible to double the salary of one section of employees. Now they have agreed to our proposal and I am hopeful things will improve very soon.
TDB: The ban on iron ore exports was a big jolt to your port. How far has the port recovered from it and what is your strategy going forward?
CCG:Although the Supreme Court has lifted the ban, it has put certain conditions for renewing mining licenses. It will take a couple of months for miners and exporters to renew their licenses and to clear other due diligence, following which things will improve. However, after this problem, we have gone around with aggressive marketing to attract different types of general cargo. It was a mistake to depend only on one type of cargo. We have survived because we have been able to attract new cargo. So, after the lifting of the ban on mining, whatever iron ore comes to us will be additional cushioning. We are also investing in developing a world-class cruise terminal, which will have all amenities under one roof and given the popularity of Goa among tourists from around the world, it will be a good revenue earner for us. It will also help the tourism sector in the state. Moreover, due to a global slowdown, our container cargo exports have registered a drop. Our container cargo mainly include Hindalco products, fisheries and pharmaceutical goods. We are also working on a new master plan, where two or three new berths will be developed under PPP mode. Shipping Minister Nitin Gadkari, during his recent visit to the port, has agreed to our proposals in principle. The projects will be executed in the next two-to-four years.
“We are going to introduce 24/7 customs clearances” - K. Anpazhakan, Commissioner of Customs, Goa
TDB: Give us a general overview of Goa Customs’ activities.
K. Anpazhakan (KA): A separate commissionerate has been allocated to look after customs related clearances at Mormugao Port. The major export item from Mormugao is iron ore, while the major import item is coal. However, after the ban on iron ore extraction, exports have come down since 2012. Hence, our revenue, which was around Rs.4,500 in 2012, has come down to Rs.1,000 crore.As far as other activities are concerned, we have airport customs, air cargo and an ICD at Vernathat come under my jurisdiction.
TDB: What initiatives have you introduced or plan to introduce to speed up custom clearances?
KA:We are going to introduce 24/7 customs services, which means our officers will be available all the time. Initially, we are not introducing the service in a full-fledged manner, but only for containerised cargo and cargo that is exempted from duty. But it will cover almost 70% of the clearances and the remaining part will be covered in a phased manner.
TDB: How practical is it to implement a 24/7 customs clearance system since support from other departments is required to make the process really beneficial for exporters and importers?
KA: Yes, you are right. The involvement of various other departments is also required. For example, if the 24/7 service is introduced, banks need to accept duty beyond office hours which they are not agreeing to. Now the duty can be paid through online transactions, but banks don’t accept them after 6 pm. For that, we are in discussions with banks but they need an approval from the Reserve Bank of India to accept payment 24/7. Similarly, there are other agencies like plant quarantine, food safety inspection, drug control etc. And if goods related to these departments need testing after office hours, then we need support from them. Then cooperation is also needed from agencies at whose locations goods are handled, like warehouses or stockyards of Central Warehousing Corporation (CWC) or CONCOR or any other handling agency.
TDB: The new CBEC Chairperson has recently taken charge. Is there any indication or special instruction from him on the implementation of customs-related reforms?
KA: Activities related to improving our services are an ongoing process and various reforms will be implemented gradually. But there are challenges. For example, we handle air cargo, but don’t have a full-fledged air cargo complex here. This means all air cargo first go to CWC warehouse at Sada in Vasco. Then it goes for inspection and all this means extra cost. So, we are planning to operate a full-fledged air cargo complex, but even for that, we need support from many other agencies like Airport Authority of India (AAI). Moreover, AAI has extended CONCOR’s license for another five years and hence, CONCOR will put up some more facilities. From our side, we will provide a full-fledged 24/7 EDI facility by providing more terminals there.
"Activities related to improving our services are an ongoing process"
Moreover, pharmaceutical goods are, today, going to Hyderabad or Mumbai for clearance. So, if all facilities and customs formalities can be provided under one roof at the airport itself, goods can be moved under bond without further inspection. GMR, which is operating a similar facility in Mumbai, has come forward to start a facility here so that bonded movement of cargo between Goa and Mumbai can be started. A similar proposal has also come from Hyderabad and if such projects can be implemented,the movement of goods between Goa and other places will be easier. Recently, we also had a discussion with Mormugao Port officials, who are planning to start a new cruise ship terminal. I have assured the port chairman of providing all customs related facilities at the terminal.
TDB: What port-related policy change(s) will be required for exports and imports from Goa to grow?
KA: In Goa, many exporters and importers feel that charges at major ports are high. So, they like to use minor ports. But there is a restriction on the kind of goods that can be handled at minor ports. Here, minor ports handle only a few items like iron and coal. In this regard, the Goa Chamber of Commerce has approached us and we have written to minor ports to remove such restrictions.
TDB: When can we see the end of intermediaries like customs clearing agents, who have been accused of charging exorbitantly high rates?
KA: Customs clearing agents are service providers, who act as intermediaries between importers-exporters and the customs department. They are professional people and have expertise in clearing activities. They also help customers in activities like getting bill of lading and country of origin certificates, and payment of duty. They also keep their customers updated on the availability and non-availability of space. They have a crucial role in foreign trade.