New entity likely to develop last-mile port connectivity

The shipping ministry is looking at setting up a special purpose vehicle (SPV) for all major ports to provide last-mile rail connectivity.

Public sector undertakings (PSUs) under the administrative control of the Indian Railways are being considered to develop the SPV, which will involve subscription-based equity from all the major ports.

The proposal, in preliminary stages, is likely to be finalised within a couple of months.

"We are currently exploring setting up an SPV to enhance last-mile port connectivity using railways," said a senior ministry official. "It will involve an equity base of Rs 50-100 crore (Rs 500-1000 million) which will be funded by port trusts. The work will either be done by the SPV or it can be outsourced."

Last-mile connectivity, in this case, is linking the port to the railway network. Using railway to move cargo increases efficiency and reduces cost, when compared with road transport.

But last-mile connectivity has been an issue ports have been grappling with for a while. Cities and population have become impediments to port connectivity.

Ministry officials and analysts pointed out that ports would benefit from this move, as it would improve the turnaround time and efficiency.

Hemant Bhattbhatt, chief executive of HMSA Consultancy Services, said: "While the emergence of cities is facilitated by ports, last-mile connectivity to these very ports is subject to city regulations."

"Additionally, last-mile port connectivity faces another level of challenge, owing to the dependence on intra-government cooperation for clearances."

The SPV might require the involvement of railway PSUs to develop rail lines.

Discussions are in the offing with Rail Vikas Nigam Limited (RVNL), Rail India Technical and Economic Service (RITES) Ltd and IRCON International Ltd, the ministry official added.

While RVNL's association with the Indian Railways involves expanding its base, engineering and construction in transport infrastructure are the core competence areas of IRCON and RITES.

WEIGHING ANCHOR The SPV:

To be common for all ports and handle last-mile rail connectivity Capital

Will receive paid-up capital from all port trusts Working

Can get the work done on its own or outsource and do interfacing Associates

Railway PSUs to be involved - RVNL, RITES & IRCON are being considered