India's Coastal Shipping initiative - Sagarmala to save up to Rs 40000 crore per year in logistics by 2025

Coal can be moved through coastal ships thereby decongesting rail networks 

Government of India's ambitious push to port-led development under the Sagarmala project will help in saving as much as Rs 40,000 crore annually in logistic costs by 2025, a report said today. 

"According to a study conducted under the Sagarmala programme, there lies a significant potential for moving raw materials and finished products using coastal shipping and inland waterways which is 60-80 per cent cheaper than road or rail transport," the Shipping Ministry said. 

Although share of coastal shipping and inland waterways in the country's modal mix remains low, an emphasis on coastal shipping to complement road and rail transport can lead to overall logistic cost savings, it added. 

"The flagship programme by the Shipping Ministry will help in reducing the logistics cost for both domestic and EXIM cargo with optimised infrastructure investment. An overall cost savings of Rs 35,000-40,000 crore per annum by 2025 is estimated from the same," the Ministry said. 

India, where the logistics cost (19 per cent of GDP) is amongst the highest in the world will undergo complete transformation under the Sagarmala Programme, by unlocking the full potential of the country's coastline and waterways. 

The programme aims to increase movement of coal through coastal route from 27 million tonnes per annum (MTPA) in 2015-16 to 129 MTPA by 2025 and increase the share of inland waterways and coastal shipping in modal mix to increase from 6 to 12 per cent, it added. 

The programme envisions reduction in the cost of power generation by Rs 0.50 per unit of power, it said. 

"It is estimated that for power plants located 800 to 1,000 km away from coal mines, the cost of coal logistics can contribute up to 35 per cent of the cost of power production," it said. 

Particularly in the case of the coastal power plants in Andhra Pradesh and Karnataka, that currently receive coal from Mahanadi Coalfields by Railways, significant savings can be achieved by taking coal through the rail-sea-rail (RSR) route. 

There are significant cost savings if Coastal shipping is used to transport Coal instead of Rail

"It is estimated that coastal movement of coal to these plants can result in annual savings of over Rs 10,000 Crore to the power sector," the Ministry noted. 

In addition, up to 50 MT of coal can be moved via coastal shipping for non-power thermal coal users (for example steel plants). Other commodities like cement and fertilisers, and food grains could also be moved through coastal shipping to the extent of about 80-85 MT by 2025. 

Additionally, an estimated 60-70 MT of cargo can also be moved over inland waterways by 2025. 

Port-led development focuses on logistics intensive industries. 

The synergistic and coordinated development of four components -- logistics intensive industries, efficient ports, seamless connectivity and requisite skill-base -- will lead to unlocking of economic value, it added. 

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Source: PTI | Updated: Oct 24, 2016, 08.56 PM IST