Posted on May 2, 2016
The Calcutta Port Trust (CPT) is facing an uncertain future following a steady cutback in the central dredging subsidy that has wrecked the finances of the economic lifeline of Bengal as well as many other eastern states.
The CPT plunged into a loss of Rs 140 crore in the last fiscal because of a higher provision for 30,000 pensioners coupled with the non-receipt of subsidy for dredging to maintain adequate draft in the Hooghly for the movement of ships.
“Without the dredging subsidy, the future of the CPT will be at stake. We have been urging the Centre to look at it favourably,” chairman M.T. Krishna Babu said.
The Centre had committed itself to pay Rs 360 crore of the Rs 453 crore spent by the port on dredging in 2015-16. So far, the CPT has received only Rs 275 crore. Cumulatively, the government owes Rs 578 crore to the port as on March 31, mostly on account of the subsidy backlog.
The government has been gradually reducing its share in the dredging pie to 85 per cent from 100 per cent in the last four years. The Union cabinet will come up with a new formula that is expected to bring down the Centre’s responsibility further from this fiscal.
The shipping ministry had urged the CPT to open the Eden channel, a new route on the Hooghly for ships to reach Haldia, hoping it would not require extensive dredging. However, belying the ministry’s expectations, the channel seemed to require some amount of dredging.
Krishna Babu, who is in additional charge of the CPT along with the Visakhapatnam port, said it would take at least a year to ascertain the amount of savings from the use of the Eden channel. “We may save Rs 50-70 crore compared with preliminary expectation of Rs 190 crore,” he said.
Pension woes
Ports at Mumbai and Calcutta have been burdened with excess workforce requiring them to set aside a huge amount of money to meet pension requirements. The CPT has to take care of 30,000 past employees compared with 33,000 at the Mumbai port, 14,000 in Visakhapatnam and only 3,500 at Paradip.
According to Subhasish Bagchi, financial adviser and chief accounts officer of the CPT, any professional pension fund manager would require Rs 5,800 crore to meet the obligations. However, the CPT has only Rs 1,300 crore in its kitty. “This is why we aggressively park additional resources in this corpus,” he said.
The CPT earned an operational surplus of Rs 603.56 crore in the last fiscal against Rs 469.49 crore in 2014-15. However, dredging expenses and pension provisions are eating into it.
“If we had received the full contracted quota of subsidy and not parked Rs 1,100 crore additionally in the pension account, there could have been some profit at the net level,” Bagchi said.
Fresh investment
Krishna Babu, who had officiated as the chairman of Paradip, making him one of the very few executives to manage top three east coast ports in the country, raised the bar for the CPT by announcing an investment of Rs 1,256 crore in 2016-17 against Rs 462 crore last year.
One of the key initiatives taken by port will be to popularise the transloading operation on high sea at Sandheads where big ships can anchor. The port is trying to reduce the cost of operation to attract more cargo. The shipping ministry has set a target of 53 million tonnes this fiscal compared with 50.195 million tonnes last fiscal. “We need to cut the cost of operation by at least Rs 150 per tonne to make it competitive compared with Dhamra,” Babu said.
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