Will Adani eat into Visakhapatnam Port Trust pie?

Visakhapatnam: With the Andhra Pradesh government approving Adani Ports and Special Economic Zone Limited's (APSEZ) proposal of acquisition of 10.4 percent stake of Gangavaram Port Limited (GPL), the landscape of maritime transport is all set to witness a transformation in Visakhapatnam.

Once the regulatory approvals are received for the acquisition, the Adani Group will have 100 per cent stake in GPL in the eastern seaboard and the move is likely to slice a part of the cargo traffic away from Visakhapatnam Port Trust (VPT).

Earlier, the APSEZ agreed to acquire 58.1 percent stake in GPL from DVS Raju and family followed by 31.5 percent stake from Warburg Pincus.

However, the aggressive marketing strategies adopted by Adani Group, faster turnaround time, competitive pricing and attractive discounts offered have a larger scope for affecting the business volume of the VPT in future.

With the Build-Operate-Transfer terminals of the Visakhapatnam Port such as Vizag General Cargo Berth Private Ltd (VGCB) and Vizag Seaport Private Ltd (VSPL) already being hit by the GPL, it may not take long for the APSEZ-controlled Gangavaram Port to cannibalise a considerable chunk of volume growth from Visakha Container Terminal Private Ltd (VCTPL) as well.

As big players are looking forward to sizeable discounts in tariff that match up with the rate offered by the GPL, Chairman of Visakhapatnam Port Trust K Rama Mohana Rao says such differential pricing leads to loss in cargo handling and fails to be viable.

"To overcome the challenge, an action plan has been readied to protect the cargo traffic from slipping away to GPL," shares the VPT chairman with The Hans India.

The 50 percent discount on lease rentals of short-term allotment of land up to 11 months, 50 percent discount on terminal charges for mechanised and manual handling of iron ore rakes, equipping of two berths with 100T harbour mobile cranes, capacity augmentation of the oil-handling jetties to accommodate Panamax size tanker vessels and discount on vessel related charges for cape vessels form a part of the action plan the VPT has in place.

This apart, development of adequate storage area

for stacking six grades plus two sub grades of different coking coal, extension of conveyor system to enhance bulk mechanical handling system, electrified railway lines to improve turnaround time of the rakes and reduce haulage charges are in the pipeline for the VSPL.

Once GPL commences its container terminal which is expected to take shape in 2022, Visakhapatnam Port Trust's business equation, in all probability, may vary. In order to counter the predatory pricing offered

by the GPL, the VPT

Chairman says, measures will be taken to equip VGCB with complete mechanised operation and adequate stacking area for storage of different grades of coal, while alternative transshipment options with foreign hub ports will be explored by the VCTPL.

As there are no expansion plans in the hinterland in near future and the available cargo needs to be shared between the ports, 'will the GPL eat away VPT's pie?' turns out to be a million-dollar question.