Dip in bunker fuel prices, Sagarmala Project may have contributed to increase in traffic at Major Indian ports


Sagarmala Project may have contributed to increase in traffic at Major Indian ports:


It’s a relief for ship fuel trading companies like Royal Marine Co, Reliance Industries, and Adani Group. Goods & Service Tax (GST) rates for bunker fuel were cut to 5% and the sales sprung back. Fuel was taxed 18% in July 2017, causing a commotion in the market. The levy gave the sales graph of many companies a downhill trajectory.

The Sagarmala Project, an initiative to radically develop India’s coastline and ports, is in turbo mode too. Recently, it was announced that Rs 2.5 crore projects will be worked upon in Tamil Nadu under the Sagarmala Project. The main objective of this Rs 8 trillion proposal is to thoroughly modernize existing ports in India, enhance connectivity, increase industrialization around the ports, and create a self-reliant and prospering coastal community.

Both of the above developments may have contributed to the increase in cargo traffic at major ports by 5% in the fiscal year of 2017-2018. The cargo traffic rose to 616.61 million tonnes from 587 million tonnes. Bulk of the cargo was made of products including petroleum, oil, lubricants, bunker oil, fertilizers, and coal.

Indian Port Association reported that the Kandla Port in Gujarat scored the biggest traffic of 99.87 million tonnes cargo. Paradip Port followed with 93.15 million tonnes cargo and JNPT Port came in second with 59.87 million tonnes.

Although the amount of cargo depends on global and domestic imports and exports, the capacity of ports also plays a big role. Seaports often have to develop strategies to accommodate the traffic, but the biggest need for them is to better their infrastructure. It helps them support oversized cargo and ships.

Several port companies are looking to expand their bunker business owing to the price drop and the demand-supply gap. By starting a physical bunker supply at Hazira and Dahej ports, Adani Group is rising in competition. According to managing director Vinod Adani, the Adani Group’s bunkering wing has a 15,000-tonne fuel storage facility at Hazira port.

Like the Adani Group, Reliance is also expanding its bunkering operations, primarily in Singapore. Reliance will lease storage units in Singapore to process gas, oil, diesel, bunker fuel, and gasoline for the Australian and South-East Asian markets.

Arun Sharma, executive chairman of Indian Register of Shipping, says “India’s LNG bunkering plans are on a ‘fast track’ as LNG-fuelled river sea vessels and LNG refueling stations are likely to emerge in the coming months.” This development, clubbed with the Sagarmala Project, has the potential to bring a trade revolution in India.


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