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To cut costs, JSW Infra to hire 30 river-sea ships to move Group’s cargo

JSW Infrastructure is looking to hire 30 ships that can move on sea and river carrying cargo between its Jaigarh and Dharamtar ports for the group’s steel plant and the upcoming cement unit at Dolvi located on the Amba river in Maharashtra.

The plan is expected to give a further push to the government’s efforts to promote coastal shipping and inland waterways to ferry cargo and cut logistics costs.

The sea port at Jaigarh in Ratnagiri district and the riverine facility at Dharamtar in Raigad district are both run by JSW Infrastructure, a unit of Sajjan Jindal-led OP Jindal Group.

“We have issued a tender for hiring 12 river-sea vessels of 6,000 tonne capacity and 18 vessels of 8,000 tonne capacity,” BVJK Sharma, joint managing director and chief executive officer of JSW Infrastructure, told BusinessLine in an interview.

With each vessel estimated to cost $6 million, the total cost of the 30 ships will be over $180 million. “Some 2-3 parties will own the ships and provide us the service on long-term basis. In turn, we will give them guaranteed cargo and pay the freight,” Sharma said adding that shipping cargo between Jaigarh and Dolvi would cost “about $3 a tonne”.

In November, JSW Infrastructure started trial run of the service deploying two 8,000-tonne river-sea vessels — the largest such river-sea ships operating in India — built at Bangladesh’s Western Marine Shipyard Ltd with each ship costing $6.4 million. The Bangladeshi yard was contracted by JSW Infrastructure to build four such ships because the price offered by Indian yards were 40 per cent higher, Sharma said.

“By doing this, we want to prove the point that cargo can be shipped along the coast and by using waterways economically and demonstrate that it is doable,” said Ravi Chander Sriram, vice-president and unit head, Jaigarh Port Ltd.

JSW Infrastructure’s facilities at Jaigarh, Dharamtar, Mormugao are currently used mostly for handling the Group’s in-house cargo and this has helped JSW save about Rs. 500 crore a year on logistics cost, Sharma said.

It is also building new facilities at the Paradip port to handle iron ore and coal and a new port at Nandgaon in Maharashtra to help reach the capacity target of 200 million tonnes (mt) by 2020 from 33 mt now, besides raising the third-party cargo base.

Jaigarh, the only port in Maharashtra that can dock Capesize ships with a water depth of 20 metres, is being expanded to handle 80 mt of cargo from 15 mt.

India’s first so-called floating storage re-gassification unit (FSRU) based LNG terminal with a capacity of 5 mt will start operations at Jaigarh port from March 2018. The LNG terminal will be run by H-Energy Gateway Private Limited (H-Energy), a unit of real estate firm Hiranandani Group.

Container terminal

JSW has also started work on building a container terminal at Jaigarh with a capacity to handle 1.2 million twenty-foot equivalent units (TEUs) a year. The expansion of Jaigarh also includes building berths for handling crude oil arriving on super-tankers.

“We want to move to a 50-50 or 60-40 mix of the Group’s own cargo and third-party cargo. As I get group cargo, for me to have the matching non-group cargo, either I’ll have to attract customers from the hinterland or buy capacity. We are continuously evaluating proposals for acquisitions,” Sharma added.

Source: The Hindu Business Line

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