DP World to invest $2 bn in India
Global container terminal operator DP World plans to invest about $2 billion in Indian operations, top company officials said here on Sunday.
DP World operates five container terminals in India.
"Port investment is crucial for growth of industries," DP World Senior Vice President and Managing Director Ganesh Raj told PTI.
Pointing out the significance of investment in ports, Ganesh Raj gives the example of Chennai container terminal that is being maintained by DP World.
"Before we took over, the terminal was witnessing a growth rate of 9 per cent per annum. But now it is clocking 22-23 per cent," he said.
Besides Chennai, the company handles container terminals at Kochi, Mundhra, JNPT and Vishakapatnam. The terminals at Kochi and Vishakapatnam are DP World's while Mundhra, JNPT and Chennai's container terminal came under the company after its acquisition of P&O last year.
Container terminal operators have a problem with the Tariff Authority for Major Ports, a regulator, who decides the tariff rates.
They allege that the tariff authority uses the "cost plus method" whereas they should use the "market plus method" for fixing tariffs.
The contract for a container terminal is given based on who agrees to give the highest revenue share to port trust. So they end up quoting the highest revenue to win the contract to operate a terminal.
But the tariff authority disallows the revenue share while taking an operator's cost, Raj said, and thereby sinking an operator's profits.
"It takes at least 10 years for an operator to get return on capital. If India is still going to follow the cost plus method, the port would not get investments," he said.
His suggestion: "Port tariff should go the power tariff way. The new power tariff scheme says that whoever quotes the lowest bid will be awarded the contract."
DP World operates five container terminals in India.
"Port investment is crucial for growth of industries," DP World Senior Vice President and Managing Director Ganesh Raj told PTI.
Pointing out the significance of investment in ports, Ganesh Raj gives the example of Chennai container terminal that is being maintained by DP World.
"Before we took over, the terminal was witnessing a growth rate of 9 per cent per annum. But now it is clocking 22-23 per cent," he said.
Besides Chennai, the company handles container terminals at Kochi, Mundhra, JNPT and Vishakapatnam. The terminals at Kochi and Vishakapatnam are DP World's while Mundhra, JNPT and Chennai's container terminal came under the company after its acquisition of P&O last year.
Container terminal operators have a problem with the Tariff Authority for Major Ports, a regulator, who decides the tariff rates.
They allege that the tariff authority uses the "cost plus method" whereas they should use the "market plus method" for fixing tariffs.
The contract for a container terminal is given based on who agrees to give the highest revenue share to port trust. So they end up quoting the highest revenue to win the contract to operate a terminal.
But the tariff authority disallows the revenue share while taking an operator's cost, Raj said, and thereby sinking an operator's profits.
"It takes at least 10 years for an operator to get return on capital. If India is still going to follow the cost plus method, the port would not get investments," he said.
His suggestion: "Port tariff should go the power tariff way. The new power tariff scheme says that whoever quotes the lowest bid will be awarded the contract."
