Political uncertainty and route rationalization hits coal traffic at Vizag Port Trust

Visakhapatnam (VSKP): Visakhapatnam Port Trust (VPT), which is going all-out to boost its coal handling capacity by modernizing its berths, has witnessed a decline in the handling of thermal and coking coal by 5.1% and 2.7% respectively during the April to January 2013-14 financial as compared to the corresponding period previous year.

Industry sources said, however, with 2 new private terminals likely to come up during this calendar year in addition to 2 existing private terminals, the overall coal handling capacity will rise to around 25 mt.

The sources said, Route rationalization and political uncertainty want to be addressed for giving coal traffic at VPT a shot in the arm.

As of now, private terminal operators Vizag General Cargo Berth (VGCB) and Vizag Seaport Private Limited are handling coal at VPT. Adani Vizag Coal Terminal is expected to commence full-fledged operations soon and SEW Vizag Coal Terminal is expected to be operational by the end of this calendar year.

While VPT has witnessed a decline in coal traffic, thermal and coking coal volume has grown by about 25.8% and 14.43% during the April to January 2013-14 period in 12 major ports of the country as compared to the corresponding period of the previous year. The neighbouring major port of Paradip has registered an impressive growth of 20.2% in handling thermal coal and 34.6% in coking coal during 2013-14 April to January period.

“Previous coal for the hinterland of Paradip was going through VPT, because of the lack of depth in Paradip. But since Paradip has sorted out the issue with draft, it is regaining the ships, which it had initially lost out to VPT. This is the major reason for decline in coal volume at VPT. To make sure that coal volume continues to boost at VPT, the route rationalisation policy of the Indian Railways (IR) due to which coal to parts of Madhya Pradesh, Chattisgarh and Jharkhand comes from the west coast has to be stopped,” a senior shipping executive said.

Observing that VPT is the natural gateway for these states, he said, “The coal if transported from Vizag to these areas will cost about INR 700 per tonnes, but since it comes through the west coast the cost raises to approximately INR 1,300-1,400 per tonnes. This coal is eventually used by the power plants and the burden of cost passes on to the consumer. It is absolutely illogical to do such a kind of a thing. The railways should lift the route rationalization and allow power plants to choose the port of their choice for taking the coal.”

“Apart from the route rationalization, political uncertainty is also having its effect on coal volume. A lot of power projects are not getting cleared even though we have a huge shortage of power,” another industry source said.

“The Visakhapatnam Steel Plant expansion is underway, so their volumes will increase in the next one year. A couple of smaller plants are planning to increase their capacity. Once Adani comes up with full-fledged operations, we can see further growth as they a good client-base here.”