In conversation with Moneycontrol, Pravir Pandey, vice chairman of IWAI, said that the amendment to Central Road Fund Act, 2000, to address the financial need for development of waterways is ‘significant’
The Inland Waterways Authority of India (IWAI), the nodal body in the country responsible for development of water transportation, including National Waterways, received extra financial support when the Lok Sabha passed an amendment to Central Road Fund Act, 2000 during the winter session of the Parliament.
The amendment proposes to allocate 2.5 percent of the collected funds for the development of waterways in India. Moneycontrol’s Nikita Vashisht talked to IWAI’s vice chairman, Pravir Pandey, who called the amendment to CRF “significant” while explaining about the agreement between IWAI and World Bank.
We started this project for development of national Waterways 1 in the Ganga River, in 2014. NW-1 is Varanasi (Uttar Pradesh) to Haldia (West Bengal). For the first time, we are developing waterways for bulk transportation. We have never used one for the same in our country. So, we needed technical and financial assistance from the World Bank (WB). We approached them to ask if they could help. They did their due diligence, studies and examinations and said that they would be happy to help. So our association with the WB started in 2014, somewhere in August or September.
So initially, they agreed to provide project preparatory fund advance (PPFA) of USD 3.5 million, which was allotted to us through Department of Economic Affairs, Ministry of Finance. After receiving the PPFA, we did our studies and went through due process of approvals like environment clearances, department of expenditure clearance. Since, this is a big project of USD 800 million, there were certain conditions like you need to get cabinet approval, which we got in January 2018. After this approval, WB signed the agreement with us on 5th February. Out of the total USD 800 million, USD 375 million would be given by WB, USD 380 million will be provided by the Centre from its own resources and the remaining fund, which is close to USD 40 to 45 million, will be routed through private sector.
What kind of assistance will the World bank provide apart from funding?
They are providing us technical assistance which includes experts on waterways, marine experts, naval architects, procurement experts and financial experts. They are getting all the best experts in the waterways’ development from WB.
Any project which we are doing, any multi-modal terminal project, jetty project, navigational aid, dredging project, we are running it through WB and they are proving their expert comments on it.At a time when private players are hardly investing in infrastructure projects, how do you plan to raise the requisite USD 40 million?
Traditionally, the practice has been that private sector has never come for dredging of water. It’s very capital intensive and repetitive. What the private sector is interested in is operations and maintenance (O&M). So, all these terminals which we are building, the jetties, the navigational aids and the vessels, we are expecting that the private sector would come here and invest some money.
For example, they have already shown interest in Ghazipur (UP) where we are building a small inter-modal terminal under the same project. Now, the Liquefied Natural Gas (LNG) industry, the petroleum industry want to have their bunkering and storage facility at these terminals. So what we have come to is that, where ever we have to build the jetty, we will acquire the land and they can bring in the equipment, their storage facility. We are looking at that kind of investment.
Secondly, the O&M will be done by the private sector. We will ask them to run the terminals and whatever earning we get, we will have a sharing agreement.
So what sort of sharing agreement will this be? 50 – 50 or something else?
No, we have experimented this. We have a GR jetty project in Kolkata and that’s quite a big jetty. So, with the International Finance Corporation, which is a part of WB, we did a transaction structure. We also did an international tender. We were trying to test the waters with this, whether the private sector would be interested. So, three of them qualified for this – IL&FS Limited, Adani Ports and SEZ Limited and Summit Alliance Port Limited (a Bangladesh based firm). So, the highest revenue share was offered by Summit Alliance for 38.3 percent (which will be given to us). We are going to give them these GR jetty for the next 30 years. They will run and operate it and whatever they earn from the terminal operations, it will be shared. As far as the statutory user charges are concerned, we will recover those directly.
How fast is the work progressing on NW-1? When will the waterway become operational?
This project is called as Jal Marg Vikas project and it is expected to be completed by 2022 – early 2023. The main ingredient of the project is a three meter draft throughout the 1400 kilometer across the stretch. Same is with the 45 meter bottom width / channel.
Its’ not that you just put the ship in a river and it starts moving. It’s not easy. There is shore, there is varying depth, and there is sand at the bottom. The river is also meandering. In the lean season, the water level is low, while during monsoon the water levels go up. It’s all very challenging and complex. So what we do is, we create a channel and then we maintain that channel for the vessels to pass. Our objective is to create the three meters draft and 45 meter bottom width channel.
Having the three meter draft allows movement of 2,000 tonne vessels. When we move 2,000 tonne vessel, we are equivalent to almost a full railway rake and we are also equivalent to 125 trucks of 16 metric tonne each. So we would be decongesting a lot of traffic from rail and roadways. So, this is a very important project for which we are working.
Apart from this, there are measuring interventions at multi-modal terminals that we are building at Varanasi, Sahibganj and Haldia. Work for which is already underway. We are also building navigation lock at Farakka. Alot of work is going on which is plan to complete by 2022. Things are going in time, rather ahead of time.Has IWAI tried any trial run on the Waterway?
We have already made some cargo movement, in fact 10 to 12 large cargo movement of cement, fertilisers, stone chips, fly ash and food grains. In fact, we made cargo movement of Maruti cars. So movement is taking place and people are interested in waterways. We are moving six million tonne of cargo as of now and we aim to move 21 million tonne cargo when we complete this project. We are looking at a jump of 17 million tonne on this project. Imagine, that 17 million tonne cargo, taking away 70 to 80 percent cargo congestion off road and railways.
What would you say about this year’s budgetary allocation especially in the light of the fact that Central Road Fund Act has been amended to provide extra funds to waterways?
IWAI was formed in 1986. Till 2014, there was a (cumulative) allocation of something like Rs 1,500 to 1,600 crore; could be Rs 1,700 crore. This year (2017-18) alone we are spending Rs 1,100 crore and for 2018-19, we plan to go up to Rs 1,600 to 1,700 crore. So, what we spent in the last 30 years (between 1986 and 2016) is being spent in one year.
Traditionally, not much attention was given to this organisation. Now, we have this loan from the World Bank... We have government’s budgetary support. However, this support through CRF is significant. 2.5 percent of the CRF, now allocated to waterways, amounts to roughly Rs 2,000 crore per annum. Government has also allowed us to raise money from market. It allowed us to raise Rs 1,000 crore as extra budgetary resource from market via bonds. We went to the market and did manage to raise it.How do you look at the future of Waterways in India? When do you think it will be up and running at mass scale, given the kind of push it is receiving from the government?
I wish this push was given since 1947 because we are a country where rivers are looked as waste disposal or sewage facility. Contrary to other countries, here having a river is a premium. India had turned its back towards its rivers. That’s why we are in such a bad state and our rivers are polluted. Although people talk a lot, but we all know the condition.
Right now, Indian waterways carry about 1.5 percent of total cargo. In Germany, its 8.5 to 9 percent, in China, it’s 11 percent, in Vietnam, it’s 45 percent, even in Bangladesh, it’s 22 percent. So, it’s time we take waterways seriously. It must, however, be remembered that waterways can’t be developed overnight. It’s a river after all. It needs time to train. River development in US and China happened over 50 years to achieve this level of maturity. I am not talking about 50 years (for India), but let’s say in another three to four years, with this sustained efforts, by 2022-23 or 2024, I am very hopeful that around six to seven percent of total share will be of waterways. It’s also the cheapest, relative to the other modes. Once we are able to develop the necessary level of confidence among the people, we will have people moving through waterways. There already is a lot of demand; the only thing that we need to provide is the infrastructure.Besides NW-1, what is the status of other projects?
National Waterway 1 is something that we are doing with the World Bank which has given us a lot of ideas. From the wisdom that we have drawn from this project will be applied to NW-2 (Brahmaputra). We also have NW-3 (in Kerala backwaters) and we have started projects in NW-4 in Krishna – Godavari which is helping in development of new capital Amravati in Andhra Pradesh. We are also working on NW-5.
Apart from that, Centre has passed National Waterways Act, 2016 with which we have declared 111 waterways as NW. We have completed feasibility studies for waterways in a very short time. We have found that some ae viable, some are not. Most of them have dried as well and have died naturally. There is huge siltation in the rivers too. We have found that there are about 36 waterways which can be taken up for development as a part of transportation network. In the first instance, eight new national waterways will be developed, for which interventions have started. We are doing dredging, river training etc. Detailed Project Reports for Gandak river in Bihar, Sunderbans and Rupnarayan river in West Bengal, three rivers in Goa – Mandovi, Zuari and Cumberjua and NW-4 are ready, tendered and are next in line for development. Another line of eight DPRs is ready for Narmada, Tapi and Amba and will be developed in 2018-19.We have a whole plan for development of all these waterways for the next three to four years to do very serious work of river development, which will not only be for transportation but also cargo.
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