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Jan-14 : Key Developments in Indian Container Industry

Bilateral Investment Promotion and Protection Agreement (BIPPA) between India and UAE has resulted in an immediate and positive development, A consortium comprising DP World and JM Baxi Group will build a container terminal at Vizag Port. The consortium was the only bidder for the proposed project, and the new terminal will be built at the site of the existing terminal to accommodate larger ships. Chennai Port's plan of converting its existing coal berth at Jawahar Dock into a container terminal has hit a temporary hurdle. In a reply to Tamil Nadu Power Producers Association's appeal, the High Court has ordered an interim stay against the project. Petitioners are worried that the project would cause problems for private importers as there aren't enough capacity at Ennore Port to handle Coal. PSA has won an O&M contract at Kolkata Port for 5 container-handling berths. The contract, which is for 30 years, will help firm boost its presence on the east coast.

Key Developments in Crude & Petroluem Products Industry
With signs of easing sanctions against Iran by the US and EU government, India may receive more oil and gas imports from the country. So against the estimated reduced target of 9 mn tonnes - 9.5 mn tonnes for FY15, India can now look to raise the import volume even further, up to 11 mn tonnes. Adequate availability of oil will also bring stability in crude prices, but that gain is also offset by the foreign outgo, especially in Euros, while Indian currency continues to depreciate. India may have an opportunity to cut down its energy bill. Crude from Canada's Alberta Sands may allow the country to import Crude at a 14% cheaper rate. Once the pipeline is in place, expected by 2018, the price could fall even further. Indian Oil Corporation (IOC) and Reliance Industries (RIL) have shown interest in the venture, and are expected to be among the major buyers of the Crude from Canada.

Key Developments in Fertilizer Industry
Government is likely to raise fixed cost for Urea by INR 350, resulting in a subsidy debt of INR 9,000 crore. Until January '14, India imported 6.8 mn T of Urea, in comparison to 8 mn T it imported in the entire FY13 fiscal. There are signs of crossing the last year's import volume India may save INR 1,863 crore in potash imports next fiscal, as its price has fallen drastically on the back of Cartel collapse and a reduced international benchmark for pricing the commodity

Key Developments in Coal Industry
With earlier tender floating evoking no response, CIL will invite fresh bids from interested parties like STC, MMTC, for importing coal that would be supplied to power plants under Fuel Supply Agreement (FSA). CIL will supply coal to power plants across the country till FY15, for which it is likely to import 15 mn tonnes of coal to meet the said FSA commitment. Being the only bidder to the tender floated by Cochin Port Trust in November 2013, Adani Group has been awarded the project to build a modern coal terminal at the Port. The project will be executed on BOT basis, and will have an annual capacity of 4.23 MMTPA.

Other Key Developments
The new land policy is a boon for major ports as they reel through a financially-difficult time with falling cargo at most of these ports. Leasing, on auction basis and at market rates, is now allowed for up to 30 years, against the earlier 11 months, without needing any formal approval. Ports like Kandla, Kolakta, Chennai, Ennore, etc. have started capitalizing on this judgement and bringing their vacant land under this policy to maximise their returns.

Key Developments in Indian Container Industry
Container capacity at Indian ports will receive another boost with JSW Jaigarh Port planning a 1-km berth container terminal. The project is expected to be awarded by the end of February 2014. ITD Cementation India, Simplex Infrastructure and L&T are among the shortlisted bidders, with ITD Cementation as a frontrunner. The terminal is expected to be commissioned by early 2016 PSA International has won the much-delayed 4th INR 8,000 crore container terminal at JNPT. PSA has offered a revenue share of 35.90%, while other bidders decided not to participate. The huge capital inflow for the project could be the reason for their hesitation. The 6-year late dredging project for the offshore container terminal at Mumbai Port Trust may begin in the next couple of months. This will enable Gammon Infrastructure to, finally, commence their work on the construction. Originally to cost INR 1,012 crore, the final cost of the project may escalate to INR 2,000 crore. Also, post dredging, filling up of two docks at the Port for storage yard is still an issue, and the contract for it has not been awarded yet. APSEZ has won the bid to build a container terminal at Ennore Port. Adani has offered a revenue share of 37% for the project, and the terminal will have a handling capacity of 1.4 mn TEU. Barring APSEZ, DP World was the only other bidder in the final stage, while PSA did not participate in the final financial bid.

Key Developments in Crude & Petroluem Products Industry
The ambitious 5.33 mn tonnes of crude oil storage project is likely to be commissioned by March 2014. About 75% of the work is complete involving building reserves at Mangalore, Padur and Visakhapatnam. Under the 2nd phase, more such reserves will be created in Rajasthan, Gujarat, Orissa and Kerala, bringing the total capacity to 12.5 mn tonnes. These initiatives will help India exercise some control over domestic crude oil availability and its prices. During any event wherein the supply is hampered, for instance in the current Iran situation, such reserves could be put to use to mitigate the adverse impact.

Key Developments in Coal Industry
India's coal import between April 2013 and January 2014 rose by 31% compared against the import volume for the same period last year. This is a consequence of inadequate domestic supply and increasing reliance on imports. CIL's move to invite fresh tender to increase its supply volume by acquiring a small portion from overseas isn't a permanent solution to the problem at hand. The bureaucracy and inefficiencies throughout the supply chain need to be tackled first.

Other Key Developments
With an aim to support the growing demand of coal and oil, Central government has inducted a panel to expedite setting up of 2 major ports in West Bengal and Andhra Pradesh each. Land acquisition and feasibility study is complete. The port in West Bengal will have a capacity of 50 MMTPA and the Port in Andhra Pradesh, Durgarajapatnam, will have a total capacity 54 MMTPA. Even though the intent is laudable, these initiatives will only lead to excess capacity creation while existing ports have been witnessing fall in their traffic. More than creating new infrastructure, capacities at existing ports should be augmented, and more emphasis need to be put in on improving connectivity. In a bid to make major ports more competitive against their private counterparts, Shipping Ministry has proposed that the state ports should have the freedom to fix their tariffs in line with market forces. Accounting for all their average yearly revenue and other costs, the ports can hike their rate by, maximum, 35%. In view of this, a new tariff system for the major ports is on the anvil.

* Developments as on February 22,2014

Dec-13 :Key Developments in Indian Container Industry

At a time when overall container traffic at major ports dipped by 4%, Vizag saw its container traffic rise by 12% between April - December 2013 as against the corresponding period last year. Every other major port, handling containers, has witnessed a fall in container traffic by 4.4%, at the least, and 66.7%, at the most. Fall in traffic could be attributed to the slowdown of economy that is affecting the volumes. Rise in December month container traffic could be a preliminary indication of increasing consumption in India. Despite the extension to submit price bids, Chennai Port's project for converting one of the idle coal terminals into a container terminal failed to evince any interest. None of the 3 shortlisted bidders, viz. PSA International Pte. Ltd., DP World Ltd., and APSEZ placed their bids for the project during the extended time. The reason for poor interest is due to overcapacity on the eastern coast for handling container cargo. There are several ports on the East Coast who target container volume, some of them are Paradeep, Vizag, Krishnapatnam, Kattupalli, Chennai, Karaikal, etc. However, container volumes have not increased. After a long tussle, VPT has finally agreed to award the container terminal expansion poject to Visakhat Container Terminal Pvt Ltd. The two parties could not reach consensus on the gross revenue share, which delayed the aforesaid decision. However, considering how other non-major ports in the region are expanding their capacity, VPT had to arrive at a decision sooner, or risk lose some of its market share to ports like Krishnapatnam Port, which has already started to attract VPT's customers.

Key Developments in Crude & Petroluem Products Industry
Due to volatile rupee and crude oil prices, Indian government is expected to exceed its budgeted INR 65,000 crore total subsidy for FY14. According to a report, total Gross Under Recovery (GUR) is estimated at INR 147,500 crore, which may force the government to raise upstream share of subsidy burden and increase the GUR on oil marketing companies. The Petroleum Ministry is likely to ramp up the number of exploratino blocks to 60 for the upcoming NELP X. So far, 46 blocks have been showcased, and the number may increase. More than the quantity, quality of these allocated blocks should be validated in order to maximise participation from parties across the globe.
Key Developments in Coal Industry
Chaotic regulatory and bureaucratic measures have caused delay in adding new mines and expanding the existing ones. As a result, India has been consistently relying on imported coal to fuel its power plants, while demand for power is nowhere expected to slow down. India has become the No.3 importer in the world, and import volumes between April and October in this fiscal has grown by 20% as compared to the corresponding period in the previous year.

Other Key Developments
The new land policy is a boon for major ports as they reel through a financially-difficult time with falling cargo at most of these ports. Leasing, on auction basis and at market rates, is now allowed for up to 30 years, against the earlier 11 months, without needing any formal approval. Ports like Kandla, Kolakta, Chennai, Ennore, etc. have started capitalizing on this judgement and bringing their vacant land under this policy to maximise their returns.

Key Developments in Indian Container Industry
Companies like Adani Ports, Essar Ports and L&T have shown interest in the INR 1,270 crore container terminal project at Ennore Port. To be undertaken as a DBFOT terms, the terminal will have a total capacity of 1.4 million TEU. The Port is waiting for cabinet committee approval on economica affairs, which is expected by the end of January. L&T is said to be in talks with APM Terminals to sell its container terminal at Kattupalli. Due to heavy underutilisation of the capacity, the operator has been mulling the sale route. However, state government has stated that L&T cannot do so under the current policy, as sale of a standalone infrastructure, which is part of the total package of shipyard and a terminal, is not permitted. This goes to show the sluggish state of container cargo market on the east coast, while ports continue to plan to build new terminals and expand existing ones to cater to the container industry.

Key Developments in Crude & Petroluem Products Industry
In line with the current bunker-terminal projects at various major ports, Chemoil Adani, a JV between Chemoil and Adani, is interested in developing a bunker facility at the Chennai Port. It is looking to replicate success story of Mundra bunkering facility. The Port has been handling around 2,000 vessels per annum, and is also strategically located to attract ships just for the sole purpose of bunkering. . BPCL, the 2nd largest state refiner, is planning to double combined capacity at its Numaligarh and Bina refineries. This bodes well for country's capacity to meet domestic demand for Products, which is slated to increase by more than 21% by 2017.

Key Developments in Fertilizer Industry
Urea industry may be headed for difficult times as the proposed hike in gas prices, to be enforced from April 2014, may lead to a financial burden of over INR 9,000 crore. Based on the prevailing situation then, the country may have to resort to importing more of its annual Urea demand. Bearing in mind the increased production cost, government is contemplating increasing the fertilizer subsidy on Urea by INR 350/tonne as against the industry demand of INR 700. In lieu of inadequate subsidy bailout, government has granted another INR 9,000 crore for the fertilizer sector, which may fall short by INR 25,000 crore required to clear current accounts.

Other Key Developments
The Public Private Partnership Appraisal Committee (PPAC) has appraised 5 proposals in the Port sector, which means these projects will be recommended for grant of final approval. These projects include container terminals at Ennore, JNPT, Kolkata and Kandla Port, along with the multipurpose cargo project and the Mumbai Port. These are likely to be awarded in current fiscal. Gujarat HC ordered 12 units in Mundra SEZ to suspend any type of activity until further notice. On the back of a PIL, these units were accused of starting commercial operations even before receiving environment clearance, thereby violating the law. HC has asked the MoEF to decide on granting clearance in the next 30 days, until which no activity will be undertaken at the marked sites. Port operations at Mundra, allegedly, remains unaffected by this stoppage. * Developments as on January 24,2014

Nov-13 :Key Developments in Indian Container Industry

As a lesson learned from the strikes at JNPT's two private terminals, the Government is reformulating its model concessino agreement to include clauses related to performance monitoring and penalizing. Under this agreement, every terminal will agree to a certain bracket of performance parameters to be achieved, failing which, the Port will have the legal rights to take action it sees fit. This is similar to what was followed in case of Kandla's acquisition of ABG Container Terminal as the latter could not meet the volume it had assured during contract signing. Such measures should help state-run ports to exercise more control over private operators and prevent eventualities that adversely affect the entire ports' perfromance, which JNPT has become a glaring example of. Expert Appraisal Committee (EAC) of MoEF has recommended environmental clearance to the 1st phase of the Vizhinjam Container Terminal. The recommendation comes with certain conditions, around 17 of them. Upon receiving the recommendation, Kerala government floated a global tender, inviting RFQs for parties interested in operating the Port. Another RFQ was invited for EPC contract for building breakwater and associated berths at the Port. With this, Vizhinjam Terminal becomes one of the very few PPP projects to have taken off in the recent times Key Developments in Crude & Petroluem Products Industry With the looming uncertainty of India's stance and contingency plan for reduced crude imports from Iran, a viable and an attractive alternative has surfaced. Iraq has agreed to forego shipping charges, extend credit to 60 days and nominal discount on oil, if India agrees to buy more oil from the war-ravaged country, starting 2014. The country had replaced Iran as the second-largest crude exporting country to India in FY12. Along similar lines, even Kuwait is likely to decide in the next 3 months on extending its credit period for India from the current 60 days to 90 days.

Key Developments in Coal Industry
Adani Ports & SEZ Ltd. have commenced operating at its INR 4 billion steam coal import terminal at Vizag Port. The commencement is running 8 weeks ahead of schedule, marking Adani Ports' foray on the east coast of India. The facility, a joint venture between Adani Ports and Vizag Port Trust, can handle coal volumes of up to 9 million tonnes per annum. Coal India Ltd. (CIL) failed to elicit any response for the INR 30 billion tender it had floated for importing 5 million tonnes up to FY15. Weakening demands from power sector, causing them to minimise imports is one of the causes of CIL's recent failure. CIL has also decidd to take up 126 projects to produce 438 million tonnes of coal by the end of 12th Plan period. This is likely to make little difference as demand will continue to outstrip supply.

Other Key Developments
TPG Capital India, a US-based private equity firm, is interested in buying a majority stake in Karaika Port Pvt. Ltd., by investing at least INR 10 crore to acquire the stake from existing investors. This venture will mark TPC Capital's entry in the Indian market. Private Ports are turning out to be a viable and a lucrative segment for PE investors, despite the apparent economic slowdown. Adani Ports & SEZ Ltd. signed an MoU with the Belgian Port of Zeebrugge, to act as a strategic port of entry for the European market. The two parties will collaborate on potential business opportunities between them. They have pledged to support each other in the sectors of ports and shipping, and assist each other in expanding presence internationallly. This endeavor will open up more avenues for Adani Ports, directly impacting the business segments it is involved in, including Ports.

Key Developments in Indian Container Industry
The delayed and abandoned project of a mega container terminal by the Chennai Port Trust has now taken form of a multi-cargo terminal. The proposed INR 50 billion project will accommodate infrastructure and facilities for handling both containers and other diverse cargo. It will be an Outer Harbour type project, and the container handling capacity of 5 mn TEUs will be retained. A month's time has been given to the consultants to prepare a report, with the needed restructuring of physical and financial aspects, in order to make it more compelling for the investors. Regardless of the ambitious nature of the project, unless the connectivity and evacuation issues are resolved, this project may also fail to attract too many investors. Due to alignment issues of a proposed elevated corridor, which was meant to ease connectivity and evacuation problems, has been kept on hold. There are also possibilities of the entire project getting cancelled, leaving the entire multi-purpose cargo terminal plan in lurch.

Key Developments in Crude & Petroluem Products Industr
Due to cutting back severely on Crude imports from Iran, India, in addition to other countries like China, Turkey, South Korea, and Taiwan, qualified for an exception to sanctions imposed on Iran by the US and European Union. Despite numerous attractive options provided by Iran, including a measure to reduce the widening CAD, India hasn't been able to capitalize on those options. Between April and November, India imported just over half of 11 mn tonnes that was earmarked for this fiscal. A Reliance-BP JV is likely to acquire 25% stake in the proposed LNG terminal at Mundra by Gujarat State Petroleum Corp. (GSPC). The terminal will have an initial capacity of 5 MMTPA, which could be further extended by 10 MMTPA. Besides the JV, IOC and ONGC were the other two companies that got shortlisted. GSPC is looking for a partner that could import LNG, consume the gas and market it as well. IOC and ONGC are only consumers of the fuel, while BP is a producer and trader of LNG, while RIL's twin refineries in Jamnagar are huge consumers of gas.

Other Key Developments
Jindal Steel Group's plans for building a minor port in Balasore district, Odisha, received a setback recently. A PIL was filed against government's agreement on allowing private parties to develop minor ports instead of adopting the competitive bidding route. Hence, the High Court has prohibited the state government from signing any new MoU until the said case is resolved. The PIL will act as a huge detriment for any private entity to evince interest in India's ports sector. The sector is already going through a dull patch, and such unreasonable delays will only further hamper ports' development in India, while diminishing the overall appeal for any potential investor. Adani Ports and SEZ Ltd., which will be acquiring Dhamra Port, has been appointed as management consultant to the Port. This way, Adani will get to evaluate the proposal in a better way. This is for the first time in India a potential acquirer of a company will be acting as a consultant to that port before going ahead with the acquisition. The proposed expansion plan at Pipavav Port, whose environmental clearance was challenged, has again received the nod from EAC. It was one of the 4 projects that recently received the green signal from the MoEF. Petronet LNG was granted clearance for its 10 MMTPA terminal at Gangavaram. Vizhinjam Contianer Transshipment Terminal was awarded environmental and CRZ clearances. Indian Oil Corporation Ltd. was also given the environmental nod for its 5 MMTPA LNG terminal at Ennore * Developments as on December 19,2013

Oct-13 : Key Developments in Indian Container Industry

Three bidders have qualified for the 0.8 mn TEU container terminal porposed at the Chennai Port. DP World, PSA International and Adani Group were the successful bidders to have cleared the 1st stage of bidding. They will be required to submit their final proposals for the 2nd round of bidding before the project gets awarded. This is an encouraging sign for the project and for the port segment as a whole, as 3 of the top container operators in the country have shown interest in a PPP project, which has largely remained unattractive for the private investors Visakha Container Terminal Pvt. Ltd. (VCTPL), the lone bidder for the Vizag's container extension project, will have its bid opened on Nov. 4, 2013. However, the two parties are yet to agree on the gross revenue share. Amid these confrontations, Vizag may lose its window of opportunity as ports like Krishnapatnam, Gangavaram and Paradip are also planning to enter the container market.

Key Developments in Crude & Petroluem Products Industry
Adani Ports and Uniter Liner Agencies (ULA) are among the 5 companies to have evinced interest in the INR 1,800-crore liquid terminal being planned at JNPT. With a total capacity of 15.5 mn tonnes, it may take between 5 years and 8 years for the construction to be completed. The terminal will handle an entire range of liquid cargo, including edible oil and petrochemicals. Ministry of Petroleum will now allow oil companies to start producing oil and gas from a discovery even before investment plans are cleared by the board. This move is an effort to monetise the discovery and cut the time to almost half between discover and production

Key Developments in Coal Industry
Prolonged oversupply in the global coal markets had led to expensive coal imports. However, this may not last long as certain factors would force these prices to soon return to normal levels. Causes like lower imports by China and US switiching to the cheaper shale gas, may compell coal suppliers like Indonesia to bring down the coal prices, allowing Indian power-generating companies to import more readily, without the backlash of hiked tariff, case in point Tata Power UMPP in Gujarat. India's annual coal requirements may grow from the current 649 mtpa to 730 mtpa by FY17. As a result of the impending shortage, India plans to mine 240 mtpa up to 2022. However, some experts believe it's already too late. In such a scenario, the anticipated fall in import prices would help the country bridge the supply-deficit gap, translating into business opportunities for ports.

Key Developments in Fertilizer Industry
Domestic production of fertilizer have improved and companies have kept imports on a tight leash. However, with numerous developments favouring imports like allowing private firms to directly import urea, stabilizing international market prices of complex fertilizers like DAP and Potash, and imporvement in Indian currency, will cause imports to pick up again. Also, the inventory has normalised, requiring companies to re-stock them as expectations about the rabi crop are strong. This will again encourage imports of fertilizers.

Other Key Developments
The winning bidder of the 4,000-MW UMPP project in Tamil Nadu will also get the rights to develop a captive port, along with the contract to operate the power project. The proposed port will have a captive capacity of 12 mtpa - 15 mtpa Adani Port inches closer to acquiring Dhamra Port, after its operator got the environmental and CRZ clearance, a condition that was laid by Adani Port.Odisha has plans to set up a riverine, common-user port near Paradeep Port. The feasibility study is yet to taken up, and both major ports and private investors are invited to bid for the project

Key Developments in Indian Container Industry
Adani Ports is one of the 2 groups to have submitted initial bids for the container facility at Tuna-Tekra being developed by Kandla Port. If the company were to win the project, Adani Ports is likely to handle the largest container volume in the state, and may even overtake JNPT as the largest container handling facility, especially with its 5 mtpa newly commissioned terminal taking into the equation Adani Ports and Visakha Container Terminal Pvt. Ltd. have requested the Shipping Ministry to consider relaxing the Cabotage Law, as was done for the Vallarpadam Port. Relaxation will result in almost doubling of the business, allowing shipping lines to directly come to these ports, instead of relying on transhipment from ports like Colombo, Salalah, Jebel Ali, etc. Mundra's JV with MSC for transhipment will be one of the primary benefeciaries post Cabotage relaxation After 2 failed attempts to inviting proposals for its mega container terminal, Chennai Port has finally abandoned the project, and has proposed to build a multi-purpose jetty instead

Key Developments in Crude & Petroluem Products Industry
Reliance Industries Ltd. has been undertaking an ambitious refinery expansion project at its Jamnagar facility. The company is setting up a US$ 4-billion coke gasification plant. The expansion also includes setting up an ethylene plant with a capactiy of 3.3 mtpa In addition to the refinery expansion, RIL will also be setting up import facilities to meet coal requirements of Reliance Utilities and Power Ltd., a subsidiary of RIL. India's plan to save on foreign outgoing by importing more from Iran has hit a roadblock, as the government is unable to provide insurance cover to the refiners, which the latter have demanded to safegurad their interests due to imposition of US sanctions against Iran. Key Developments in Coal Industry India's top power producer, NTPC, has plans to import 12 mtpa on a long-term basis starting 2018. Coal India Ltd. (CIL), which accounts for 80% supply of NTPC's coal requirement has been unable to meet their demands. NTPC has lined up number of power plant projects with capacity of generating 20 gigawatts of power. Some of the new plants will be completely fuelled by imported coal. To underscore the demand-supply gap in coal, Coal India Ltd., has floated a tender for importing 5 mtpa until March 2015 to meet the power producers' demands. This move clearly highlights the increasing dependence on coal imports by the country, despite, having, an estimated, world's 5th largest coal reserves. Maharashtra has agreed to the tariff revision by the Tata Power UMPP, albeit with conditions of reducing the same once imported coal becomes cheaper, and having the funding parties reduce their RoEs. Punjab and Haryana, 2 of the other state recipients of power from the UMPP, are yet to give their nods as they have moved the court challenging the hiked tariff. Despite the lack of consensus among all the recipients, generation at the UMPP is unlikely to have been hampered, indicated by the highest monthly coal import by Mundra in Oct. '13, perhaps, ever.

Other Key Developments
Shipping ministry introduced mid-sea cargo handling via barges and floating cranes to reduce port logistics cost. This has been a success at Kandla Port, by allowing it to handle Capesize vessels. This has encouraged importer to opt for Cpaesize instead of the regular Supramax, allowing Kandla to handle large volume cargo. This practice is likely to be aped and encouraged at other major ports as well that can mostly accommodate Supramax vessels. A capesize vessel, on the other hand, can carry double the volume and at a relatively lower unit cost. If this combination of barge and floating cranes are found to be viable at other ports, the capacity constraint issue at major ports could be mitigated. * Developments as on November 27,2013

Sep-13 : Key Developments in Indian Container Industry

State-run Shipping Corporation of India (SCI) increased container freight rates by about 80%, and have been put into effect since September 2013. These rates would affect make contianer movement on the Europe, Mediterranean, Black Sea and Red Sea expensive. Numerous factors like excess capacity, fuel costs, insurance premiums and port handling charges forced India's largest shipping company to hike their container freight charges. SCI had, in the past, implemented such hikes, but competiton had forced them to reduce their rates.

Key Developments in Crude & Petroluem Products Industry
The opportunity presented to the Indian government by Iran of buying crude oil in rupee is likely to be capitalized on. Indian government is making serious attempts at enahcing its crude import from the Middle Eastern country after the former slashed its import from the latter by more than 26%. Liberal terms of payment and extension of 90-day interest-free credit facility should allow the country rein in its CAD that has been spiralling out of control, especially in the wake of depreciating rupee. Once, the 2nd largest supplier, Iran now occupies 6th spot. India imported about 2 mn tonnes from Iran, and if it imports the remaining 11 mn tonnes (as per the reduced import share), India is likely to cut its foreign exchange outgo by US$ 8.47 billion.

Key Developments in Coal Industry
India's coal availability shortage is in part due to inadequate production volume. For the first time ever, government has evinced interest in allowing private companies to bid for coal blocks through competitive bidding. Erstwhile, coal mining licenses were allocated to an entity based on recommendations of a panel of bureaucrats. So far about 178 blocks have been allocatted, of which only 40 are producing, which is due to hassles in getting approvals. Involving private firms would take load off CIL, which has been missing production target for years, forcing power companies to resort to expensive import route

Key Developments in Fertilizer Industry
Fall in Rupee will have an impact on subsidy to be paid to Urea and P&K producers, which is close to Rs.66,000 crore for this fiscal. Decline in currency value is also affecting Urea imports, but part of that effect is being offset due to fall in global prices of these nutrients. But this repreive could be negated if international suppliers were to form a cartel again, monopolizing pricing. In such an event, commodities dependent on fertilizers like food grains and the like would become expensives as domestic production of Urea is also an expensive proposition due to high gas price

Other Key Developments
On one hand, Chennai Port is preparing for rebidding of its proposed mega container terminal, which it plans to finalise by December 2013. On the other hand, Shipping Ministry has taken the Chennai project off the list of target projects for this year, although it remains hopeful Port project at Sagar island, south of Kolkata, is likely to be operational by 2019. The port is proposed to have 16 berths, with a capacity of about 50 mn tonnes in handling dry bulk and container cargo. Indian Navy also wants the project to be expedited as its a critical location in terms of maritime security, and the force would be deployed at the port once its is set up.

Key Developments in Indian Container Industry
Kandla Port overtook the failed containter terminal from ABG Infralogistics after paying off its lenders. This was in light of ABG's failure to fulfill the minimum guaranteed volume since 2008. Even after the takeover, Kandla is unable to handle containers because cranes are not working, as well as lack of equipments such as trailers, reach stackers, etc. Even after rebidding, Vizag's container terminal saw only one bid from Visakha Container Terminal Pvt. Ltd. A number of factors could be attributed to the failure in attracting more bids, chief being major interest in the 4th container terminal project comin up at JNPT. Also, traffic projections for container cargo around VPT aren't encouraging either.

Key Developments in Crude & Petroluem Products Industry
A crude storing facility of up to 5.33 mn tonnes is likely to be commissioed by mid 2014. Located in Vizag, Mangalore and Padur (Karnataka), these storage units have been proposed to be used as a buffer in case of oil-supply disruptions. Also, these units could be filled when global oil prices are at a low, and could be used in times of market volatility. The reserves would have the capacity to meet nation's total oil demand for close to a fortnight. Governent is considering various models to rope in partners who could provide reserves for these units. Companies from Middle East have been approached, which, if panned out, could allow India to emerge as a regional hub in oil trade in the region, in addition to engaging in rupee trade with some of the countries in the Middle East. Such a compensatory measure could allow India to ensure energy security in the worst of times, while keeping the foreign exchange outgo at minimum

Key Developments in Coal Industry
Coal India Ltd's. (CIL) inability meet nation's coal demand is also in part due to inadequate logistics. CIL claims it can provide the incremental demand, provided proper transportation infrastructure is in place. In view of this, 3 critical rail projects are being fast tracked that have the potential of transporting around 300 mn tonnes of coal. India had imported close to 140 mn tonnes of coal last fiscal, which may shoot up to nearly 190 mn tonnes by FY17. Improvements in logistics and private participation in coal mining could help bring down the dependence on coal imports.

Key Developments in the Fertiliser Industry
In the wake of declinng global Urea prices, government has now allowed private firms to import Urea directly from international companies. Erstwhile, these companies could source Urea only through state-run canalising agencies like MMTC, STC, etc. Such a move could help India meet its annual requirement, especially when domestic production is more expensive than import Russian fertilizer producer Acron and an Indian firm are in talks to engage in several Phosphate projects in Russia in order to secure supply of the phosphate fertilizers. India normally imports more than 7 mn tonnes of phosphatic fertilizers per year, mainly DAP. Securing supplies would help in case of price fluctuation, which may prove detrimental in the existing situation of rising food demand and government's promise of food security.

Other Key Developments
Karnataka government is planning to build a port at Honnavar, and ha also received a proposal from Jindal Group of building a captive port in the region. On the other hand, insufficient bids has forced Kerala government to re-tender the Azhikkal Port project. These developments show a contrasting side of port development situation in India. * Developments as on October 24,2013

Aug-13 : Key Developments in Indian Container Industry

After being idle for almost 2 months, L&T's Kattupalli Container Terminal is poised to resume its operation, and NYK Line has announced a regular service of Thailand Chennai express after successfully carrying out trial runs at the Terminal in the past months Country's container handling capacity will further expand on the back of proposed container terminal off Kandla creek at Tuna-Terka, with an annual capacity of 4.9 Mn TEU. It will be developed in 3 phases, with 1st phase to be commissioned within 3 years of award. This is expected to further intensify competition among major container handling terminals in the region, viz. Mundra and Pipavav, who are looking to capitalize on shares lost by JNPT

Key Developments in Crude & Petroluem Products Industry
In FY14, India is likely to import about 80% of its crude oil requirements. Domestic crude oil ouput also fell by 2.3% in July 2013, forcing refiners to import close to 16 Mn T of oil as against 14.6 Mn T the same month last year. In order to meet demand from new refineries, India is looking to increase its share of crude import from Iraq, provided the country offers special price for the same. Iraq has, however, ruled out offering any discounts to India.

Key Developments in Coal Industry
Tata Power's Mundra project received an affirmative nod from CERC on hiking their tariff to mitigate losses due to costly imported coal. This will make power supply costlier for consumers relying on Tata's generation. However, this recommendation is awaiting nod from panel representing the regions to which Tata's unit supplies power, viz. Guajrat, Maharashtra, Rajasthan, Punjab and Haryana. The delay in revising the proposed tariff is causing further losses to Tata Power. The longer this takes, the more impact it may have on Tata's share of coal imports from Mundra.

Key Developments in the Fertiliser Industry
In contrast to issues stemming from subsidy payment and gas price hike, fertilizer companies are witnessing better times on the back of healthy crop sowing resulting in increase urea sales. Key raw materials like Urea, DAP, Ammonia, Phosphoric Acid, Potash and Rock Phosphate are at a low, encouraging fertilizer production. But despite the low price of these raw materials, Urea import may add to the fiscal burden due to the depreciating rupee. In FY13, India imported around 8 Mn T of Urea. By August 2013, the country had imported around 2 Mn T.

Other Key Developments
An example of diminishing international interest in Indian port sector is Paradip Port's invitation of fresh bids for construction of 2 berths. One of them is a 5 MTPA mutlipurpose berth with facilities to handled container cargo, while the other is a 10 MTPA deep draft iron ore berth. Earlier, Blue Water Iron Ore Terminal in combination with MMTC and Gammon had bid for for the iron-ore berth, while Sterlite-Leighton for the multipurpose berth. Three major projects at Visakhapatnam has been stalled due to, mostly, non-interest shown by bidders. Its container terminal project had received only one bid from Visakha Container Terminal Pvt. Ltd., while development of WQ7 & 8 have been taken up by the Port itself as it failed to attract any bidders. Modernisation of the ore handling plant was awarded to Essar, but it invited criticisms from unions and other sections, citing double standards on private companies' parts when it came to bidding for certain projects.

Key Developments in Indian Container Industry
Container handling at major ports have consistently registered negative growth vis-à-vis volume these ports handled the same month last year. It is believed that the second half would be better and it should consolidate the dip experienced in the first half. Optimisim for the second half is on account of improvement in the macro factors and rupee stability Constant revisioning in the Chennai Port Container terminal bidding may force the successful bidder to spend INR 1,300 Crore. Heightened project costs makes it further unviable for most of the companies who prefer treading reluctantly during slow economy

Key Developments in Crude & Petroluem Products Industry
In the face of widening CAD, India has the option of increasing its import from Iran, while the latter has agreed to carry such transaction in Indian currency. However, due to western sanctions, India has curtailed its import volume from the usual 22 Mn T to 18 Mn T. Depreciating rupee makes it ever more prudent to deal in Indian currency rather than exhausting forex reserves, adding to the woes of India's trade deficit. India could, potentially, save US$ 8.47 billion on its crude import bill by increasing its purchase from Iran for the remaining part of the fiscal.

Key Developments in Coal Industry
Coal India has rejected the offer of borrowing surplus coal from captive mines of power and steel firms as it believes it would not be able to return the borrowed volume at a later date. The proposal was offered by the government in view of expensive coal import Rupee depreciation has forced Indian buyers to reduce shipments from top coal producers in Indonesia

Key Developments in the Fertiliser Industry
Fertilizer Corporation has inked an MoU with GAIL, CIL and RCFL for revival of Talcher urea plant in Orissa, which was shut back in 2002. Lack of expdition in project clearances has resulted in Zuari Fertilizer shelving its 1.15 Mn T Urea Plant project in Karnataka.

Other Key Developments
GMB is planning to add 46 Mn T of capacity in FY14 to all the non-major ports falling under its ambit. - Adani Port and SEZ is increasing capacity of its South Port Terminal - III by 5.5 Mn T, and Essar Group has set up a 5 Mn T coal jetty at Salaya. - LNG Petronet is setting up a 2nd LNG jetty at Dahej Port adding capacity of 2.5 Mn T. Existing capacity at Dahej terminal of 10 Mn T will be increased to 15 Mn T. - ABG Group is setting up a 4 Mn T jetty at Akrimoti port in Kutch. Ultra Tech will be expanding its jetty's capacity at Pipavav by 5 Mn T. - ABG Cement has proposed developing a jetty at Magdalla with an annual capacity of 5 Mn T. Similarly, Sanghi Cement is planning on expanding its jetty's capacity at Jakhau by 8 Mn T - A bulk general cargo terminal of 5 Mn T capacity has been set up at Hazira These expansions plans further ensures Gujarat's supremacy in handling traffic vis-a-vis any other state in the country. GMB projects have a better turnaround than projects initiated by state governments at major ports. Such comprehensive, all-round developments may even allow non-major ports in Gujarat to handle more than the combined cargo handled by all the major ports in the country * Developments as on September 20,2013

July-2013 : Key Developments in Indian Container Industry

Visakhapatnam rejected Visakha Container Terminal's bid for container terminal expansion because the estimated the cargo growth profiled by the latter was too low. Yet another failure in PPP domain indicates its losing appeal to private firms driven by weak economic scenario due to low cargo volume, funding problems and other risk factors Asia’s largest modern container terminal would be shortly set up at Tuna in Kandla Port. It is expected to have a jetty approximately 2.2 km long Shreyas Shipping planned to start 2 new coastal container services linking port on Kolkata in East to Mundra in West, from mid August. Key Developments in Crude & Petroluem Products Industry Gujarat Petroleum and Energy Minister Saurabh Patel announced that the proposed Mundra’s 5MT LNG terminal is expected to be commissioned by 2016. An effect of sanctions on Iran, HPCL has preferred importing crude from Iraq and may import from Iran only during worst-case scenario and as the last resort India overtakes US as Nigeria's top buyer for crude oil.

Key Developments in Coal Industry
Power companies are expected to import nearly 82 mn T of coal in this fiscal. About 50 mn T of the total volume will meet the shortfall from domestic sources and the remaining 32 mn T is for power units that run on imported coal. Total coal import in the current fiscal is expected to cross 160 mn T

Key Developments in the Fertiliser Industry
GAIL has evinced interest in entering the fertilizer industry. The largest state-owned gas provider in India plans to supply Ammonia Synthesis Gas for production of fertilizerss in FCIL, Talcher, Orissa In contrasts to average price of $417 per tonne in FY13, India imported Urea at an average cost of $340 per tonne in Q1FY14, lending to the healthy import rate in the country. Based on the current global market outlook for Urea, it is unlikely that the cost will touch the $417 mark.

Other Key Developments
Indian government's claim of tripling total port capacity to nearly 3.2 billion tonnes by 2020 on the back of private funds amounting to about INR 3 trillion is losing its credibility as numerous project tenders have failed to evince interest from bidders. To meet increasing operational costs and maintain reliability of service to customers, the Shipping Corporation of India (SCI) has hiked rates on Indian sub-continent to Europe. The rate increase will be at $200 per TEU and $400 per TEU respectively for shipments with effect from 1st August 2013 India is purported to hold immense potential in becoming a bunkering hub. Currently, India's total potential in supplying bunker is nearly 1.6 MMTPA as against requriement of around 20 MMTPA. In this vein, HPCL has started bunkering at Kochi Port. Nissan signed an agreement of 10-year with Ennore Port Ltd for export of its vehicles. It also plans make India an export hub. Six non-major ports in Kerala along with Azhikkal and Ponnani would be developed implementing Public-Private Participation model MSC announced its three new services – Red Sea Service, East Africa Service, South Africa Service which will be directly connected to their ports from Mundra and Nhava Sheva GAIL has signed an MoU with Paradip Port to set up an offshore LNG terminal at the port, with a total capacity of 4.8 mtpa Key Developments in Indian Container Industry JNPT is restricting qualifying criteria for its 4th container terminal project by considering only bidders of stronger financials and prior experience. Judging by the dismal fate of of most of the major PPP projects at major ports, such a move may not be conducive for the project to materialize soon Terminal Investment Ltd. SA (majority owned by MSC), will be bidding for an INR 8,200 container terminal at JNPT with a fully realised capacity of 4.8 mn TEU, making it the largest single-container terminal by capacity. The bid will be in partnership with APSEZ, holding 51% stake in the consortium. Chennai Port may discontinue coal handling as it has offered two of its only coal berths to be converted into a container terminal. Bidding is expected to commence soon.

Key Developments in Crude & Petroluem Products Industry
India's crude import may grow by 0.5% to 186 mn T in comparison with the last fiscal as the country did not add new refining capacity since March 2012 due to low demand and slowing economy. State-run IOC has decided to slash its crude import from Iran by nearly 23%. The decision from the 3rd largest importer of Iranian crude oil clearly reflects the far-reaching effects of sanctions imposed on Iran by the US and EU government

Key Developments in Coal Industry
In contrast to importing 9.9 mn T in April-July 2012, India imported 11.2 mn T during the same period this fiscal. The rise was on account of lower coking coal prices in the international market, additional supply coming from the unusual market of Mongolia. Despite the rupee devaluation, imports didn't slow down because importers preferred importing coking coal and converting it into coke at the cost of $196/T instead of buying coke domestically at $260/T.

Key Developments in the Fertiliser Industry
With no capacity addition for urea production in the past 13 years, government's "buy-back guarantee" had induced a capacity-addition spree with over 15 participants showing interest in expanding urea production in the country to meet the annual gap between the annual 22 mn T supply and 29 mn T demand equation. About 13 bidders wanted to set up new units, taking the production capacity to 41.2 mn T, which is higher than the projected demand of 34 mn T. As a result, government has decided to discontinue the "buy-back" scheme for new capacity addition. Also, with high gas prices, domestic urea production would cost $550/T as against importing the same at $310/T. This should further justify increasing Urea import until gas prices are brought down to a manageable level, and/or government decides to reimburse the producers for their excess oeprational cost, both of which are highly unlikely.

Other Key Developments
In order to meet the projected cargo-handling capacity demand of more than 3 trillion T by 2020, Indian government has decided to set up 2 more major ports. One of them will be located on Sagar Island in West Bengal, while the other is proposed to be built at Dugarajapatnam in Andhra Pradesh. The government needs to do more than identifying new locations to ensure that such PPP projects do not meet the same fate as most of their recent projects have so far. Essar Port and US' TPG Capital is looking to acquire majority stake in the debt-ridden Marg Group's Karaikal Port in Tamil Nadu. The deal also hints at debut of TNG Capital in the Indian ports and logistics sector. Petronet has requested IOC to refrain from developing an LNG terminal at Ennore, intended to meet gas needs of its refineries in Tamil Nadu. In agreeing to do so, Petronet has offered to supply the requisted gas supply to IOC through its soon-to-be commissioned 5 MTPA refinery in Kerala. * Developments up to the point of delivery date

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