Mumbai: Mumbai-based conglomerate Essar Group plans to expand its logistics business by building a port terminal for liquefied natural gas (LNG) and a container cargo facility as well as freight stations and depots under its arm, Essar Shipping Ports and Logistics Ltd.
“We are planning to build a port terminal for LNG handling and storage. The group is looking at setting up this facility in the west coast,” said a senior Essar Group executive, who didn’t want to be named. Details such as investment and capacity are yet to be decided.
Cargo logistics: A file photo of Jawaharlal Nehru Port. Essar has expressed interest in developing a fourth container terminal at the port. (Photo: Ashesh Shah/Mint)
Expanding into LNG would be a logical extension of the group’s existing port business, the executive said. Essar plans to execute the project on its own, though it may tap the technical expertise of other companies, he added.
Essar has a port and terminal facility at Vadinar in Gujarat providing handling, storage and terminalling services for crude oil and petroleum products to refineries and traders, according to a Mumbai-based analyst, who tracks the sector.
“With LNG and container facility, Essar will be having almost all types of cargo-handling facilities in its ports portfolio,” added the analyst.
Essar Group is also setting up a 30 million tonne (mt) per annum all-weather port and jetty at Hazira in Gujarat for import of iron ore, pellets, coal, limestone and export of finished steel products. It also proposes to build an integrated terminal at Salaya for handling coal and pet coke used in power plants.
Essar’s entry into the container port and other related activities such as container freight stations and inland depots may be difficult, said the analyst. The container activities are mainly concentrated on Jawaharlal Nehru Port near Navi Mumbai. “Though there are private container ports in Gujarat, Essar Group will find it difficult as there is no proper connections through rail and road to evacuate the cargo,” the analyst said.
Essar has also expressed interest in developing a fourth container terminal at JN Port.
Port traffic in India is expected to increase to 1,009mt by fiscal 2012 and 1225mt by fiscal 2014 from 649mt in fiscal 2007, according to the shipping ministry. Sanjay Mehta, managing director of Essar Shipping, said the group is positioning itself as an “end-to-end logistics services provider” with interests in ports and terminals; logistics services; sea transportation and oil field services. Essar Shipping has committed investments of more than Rs10,000 crore over the next three years.