Hope on the Horizon

Some headway in greenfield port projects

In the past few years, the government has proposed the development of a number of greenfield ports in the country. A continuous increase in traffic coupled with heavy congestion at major ports has prompted maritime states to develop new ports, primarily with the support of the private sector.

According to India Infrastructure Research, at the state level, 15 projects worth Rs 418 billion and involving a capacity addition of over 500 million tonnes are under way. Of the projects in the pipeline, five are at the bidding or preliminary stage of development, while the others have been awarded. Work on these has either started or is yet to start.

The past year saw some movement on three projects that have been long delayed. In July 2015, one of the most awaited port projects, Vizhinjam, crossed a major milestone, with the Kerala government finally awarding the contract to Adani Ports and Special Economic Zone Limited (APSEZL). This was the fourth attempt to award the project. On April 21, 2016, construction work on the breakwater of the terminal commenced. The breakwater is being constructed by the Grand Four Group at an estimated cost of Rs 16 billion.

More recently, in May 2016, the Andhra Pradesh government cleared the construction plan for Machilipatnam port. According to the plan, land acquisition for the port will be done by pooling private and government land. About 4,500 acres of land, including 2,200 acres of private land, will be pooled. In December 2015, the government passed the Machilipatnam Area Development Authority Bill for the development of the port. Earlier, in September 2015, the state government had given an extension of 36 months to Navayuga Engineering Company Limited (NECL) for project execution. The concession agreement for the project was signed in June 2010.

Further, the Rewas port project has obtained approval from the forest advisory committee (FAC) of the Ministry of Environment, Forest and Climate Change to divert 86.44 hectares of forest land for Phase I of the project. The project is being implemented on a public-private partnership basis and a special purpose vehicle, Rewas Port Limited, has been formed for the development, operation and management of the port.

Meanwhile, work started on Yogayatan port in Maharashtra in December 2015. Recently, Infrastructure Corporation of Andhra Pradesh Limited (INCAP) invited request for proposal (RfP) bids for the selection of a developer for the Bhavanapadu port project. INCAP has shortlisted three firms to participate in the RfP stage – APSEZL, Gangavaram Port Limited and NECL.

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Issues and challenges

At present, land acquisition is one of the biggest challenges in the port sector. In the past too, delays in land acquisition have severely inhibited development activities at various non-major ports including Rewas port (Maharashtra), Astaranga port (Odisha) and Machilipatnam port (Andhra Pradesh).

A number of ports have also faced inordinate delays due to relocation of projects. This has significantly added to time and cost overruns. Various greenfield port projects, especially the Dholera and Khambat projects in Gujarat, have been severely delayed due to a change in project location.

Another issue that plagues the sector is that private players have sometimes not participated in the bidding process for greenfield non-major ports. This is due to various concerns including those related to project viability as well as delayed development of supporting infrastructure, such as connectivity. The responsibility for the development of road and rail networks falls upon the developer itself, thus affecting project economics (owing to additional capital expenditure).

Legal and procedural issues have also  delayed projects in the sector. These have sometimes led to litigation, which in turn has delayed project execution. For Chudamani port (Odisha), for instance, the Odisha High Court ordered an interim stay on the government signing concession agreements with port developers till further orders. The case is still pending even after four years of the interim stay order. Delay in obtaining environmental clearances (ECs) is another impediment in project execution.


The upcoming ports in the country provide significant business opportunities for various stakeholders, including developers, consultants and financiers. However, the issues in obtaining land as well as environmental clearances along with the lack of connectivity remain key challenges in the sector. Going forward, there is a need for expediting the implementation of new port projects to handle the growing cargo volumes and relieve the pressure on major ports.


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