Sinking fortunes at country's oldest port

Kolkata port forced to sell/lease 100 acres land to meet pension liabilities

Shine Jacob / Kolkata July 5, 2012,
Business Standard
The oldest port in India, the Kolkata port, officially known as the Kolkata Port Trust (KoPT), is struggling to survive.

KoPT, which handles Kolkata Dock System (KDS) and Haldia Dock System (HDS), has been forced to sell or lease around 100 acres of its large 3,000-acre land bank in the city to meet pension liabilities.
Kolkata's port is steeped in history. Its roots go back to the Mughals. The British called it the gateway to the East and the port played a strategic role during the second world war, surviving two attacks on it by the Japanese.
That history, unfortunately, hasn't been able to stave off a plague of problems that have steadily piled on, questioning the port's survival. One of those is the question of how to look after its ageing ex-workforce. According to a top port official, KoPT needs an estimated Rs 130 crore annually to pay pension dues. More, implementation of the new pay scale has become an additional pressure to KoPT, which has about 9,000-odd staff.

“We have about 30,000 pensioners with KoPT. To meet the pension liability in future, we need an additional corpus of Rs 3,000 crore, adding to the Rs 2,000-crore corpus we have created since 2004," says Manish Jain, acting chairman, KoPT. “To create the additional amount, we have submitted a proposal with the Centre to lease out or sell about 100 acres of land, at seven to eight prime localities in the city. It will be done through the auction route," he added.

There's another, equally pressing problem confronting KoPT — competition from deep-sea ports which are fundamentally different from those like KoPT that are situated on a river that eventually leads to the ocean. Therein lies one of its current-day disadvantages. “It is a fact that we are losing traffic to other non-major ports in the region like Dhamra, Gangavaram and Krishnapattanam," says Jain. “We have natural constraints like siltation. While the draft in Haldia is between seven to eight metres, in Kolkata it is between 5.5 to 7.5 metres. We have to live with this competition and are charting out development plans to tackle this," added Jain. Annual dredging costs for Kolkata port,which is 126 miles away from the ocean, is around Rs 350 crore.

Consequently, this has meant that the lifeblood of any port, cargo, has taken a hit at Kolkata port. There has been an 80 per cent drop in crude oil handling-from 11 million tonnes (mt) in 2007-08 to 2.2 mt in 2011-12. For iron ore handling, the drop has been around 50 per cent, from eight mt in 2007-08 to four mt in 2011-12. “One of the major reasons for the drop in traffic is because of draft issues in Kolkata. There was a considerable drop in handling of petroleum, oil, and lubricant (POL) products and iron ore due to banning in key states," said A Janardhana Rao, managing director, Indian Ports Association (IPA).

According to KoPT, the dynamic railway freight policy on iron ore compared to the earlier distance-based policy has given an added advantage for ports like Paradip and Dhamra. On the other hand, crude handling is down since Haldia-Paradip pipeline came into place.

Overall, during the first two months of this financial year, (April-May period) traffic at the port dropped 21.55 per cent to 6.3 mt, compared to 8.02 mt during the same period last financial year. The port also registered an annual drop, from 47 mt in 2010-11 to a record low of 43.24 mt in 2011-12.

Surprisingly, despite these problems, the port authorities claim its net profit has increased 15.7 per cent from Rs 78 crore in 2008-09 to Rs 90 crore during 2011-12. “KoPT has increased operational efficiency and also improved parameters like turnaround time by 50 per cent in recent years," Jain said.

Yet, that profit is not going to tackle the port's considerable problems. To deal with the crisis, KoPT has laid a huge investment and development roadmap. It is planning to expand the handling capacity to 100 mt by the end of the 12th Five Year Plan, with an investment of about Rs 15,000 crore. Of the Rs 15,000-crore public private partnership projects, KoPT would be investing about Rs 2,500 crore.

“Though hit by a territorial battle with Orissa, we are pinning huge hopes on the transloading terminal project at Kanika sands to become the first port of call. More, we are now reviving the plan for a deep-draft port in the state," said Jain.

“In addition to this, KoPT is speeding up the pace of other projects. We have already got 30 bids for the Rs 2,000-crore Haldia Dock-II project and a request for quotation is already out for Diamond Harbour contanier terminal project," he added. Jain also mentioned other areas of focus that the port would get involved in, such as coking and non-coking coal, manganese ore and vegetable oil.

In addition to this, the port is commissioning Eden Channel — a proposed navigational route into the Haldia Dock Complex (HDC) that will provide an alternative to the silt-choked Auckland channel — which has a natural draft of more than nine metres, by October this year. However, critics believe that these projects which have been in the pipeline for a long time, have failed to take off till now, making life difficult for the port.

Whether it has procedural or natural constraints, Kolkata Port’s survival is not just vital for the vast hinterland of Eastern India but also for the two land-locked kingdoms of Nepal and Bhutan. It urgently needs to reclaim its lost glory, so that the vitality of one of the India’s oldest-trading franchises, which has imparted vibrancy to the city that houses it, can continue to do so.