Still waters at Ennore terminal rock Adani’s boat
Last year, when the Adani group invested ₹800 crore to set up a container terminal at the Kamarajar Port (KPL) in Ennore, it would never have visualised a predicament in which the terminal would be idle.
Although it is located just 30 km from the bustling Chennai port (ChPT), which has two busy container terminals run by DP World and PSA Singapore, demand for cargo was never expected to be an issue. Both ports tap into the vast hinterland, which spans parts of Andhra Pradesh, Karnataka and southern Tamil Nadu.
But today, the Adani Ennore Container Terminal (AECT), which can handle 1.4 million 20-foot equivalent units (TEUs) annually, sees virtually no activity as most shipping lines prefer to give it a miss.
That inactivity has arisen because of vessel-related charges. Kamarajar Port’s charges on shipping lines are far higher than those levied by Chennai port. The difference is as much as $23,000 (₹15.30 lakh) per call.
While both ports have a similar base tariff, what tilts the balance in favour of the Chennai port is the additional 40 per cent discount Chennai Port Trust offers mainline vessels over the 15 per cent cut most ports offer.
The Adani Group’s efforts to seek a similar additional discount from Kamarajar Port Ltd have not fructified. Even worse, the 15 per cent discount that KPL allowed as a promotional offer is set to end soon.
“KPL is unwilling to match ChPT’s discounted tariff, making it unviable for shipping lines to call on AECT,” said Ennarasu Karunesan, CEO, Southern Ports, Adani Ports and SEZ.
Wide berth
“Shipping lines across the world are struggling financially due to over-capacity. They prefer a port where charges are minimal, attractive and commercially viable,” he told BusinessLine.
Since October 2017, only six container vessel have called on Kamarajar port. But the port officials are unmoved. In April, they told AECT that the port is not obligated to match the concession offered by ChPT. They put the onus on AECT to offer discounts, if required.
“A terminal operator cannot offer discounts on vessel-related charges,” countered Karunesan.
Interestingly, in the adjoining Katupalli minor port, where Adani operates another container terminal, it has been able to match ChPT’s tariffs. Ships call on the port regularly.
The difference in tariff is puzzling, given that both the ports are under the Shipping Ministry. Chennai Port Trust, in fact, has a 33 per cent stake in the Kamarajar Port.
“Shipping lines have made it clear that we should match vessel-related charges at Kamarajar port in line with Chennai port, saying they will not be in a position to absorb additional charges to carry cargo from the same hinterland. There has to be a fair-trade practice and a level playing field to induce business to Kamarajar port and we should be extended the required support,” said Karunesan.
Left with little option, Adani group has now approached the Shipping Ministry, seeking that level playing field. If the issue is not resolved quickly and AECT continues to remain idle, the project could become unviable and end up as a non-performing asset, warn experts.
Source: The Hindu Business Line