Deendayal Port Authority plans facility to supply green fuel to ships

With green shipping starting to gain traction, the Deendayal Port Authority in Kandla is looking to set up facilities to supply green fuel to ships plying in the Singapore and Rotterdam corridor.

"It is projected that by 2030, around 200 vessels will be running on this Rotterdam-Singapore corridor. And Kandla port being nearer to this international trade corridor, we are strategically located to take advantage of this position and market ourselves as one of the green fuel suppliers to the world for the maritime sector," Sushil Kumar Singh, chairman, Deendayal Port Authority, said on Thursday.

Singh is hopeful that the project will be ready by 2028.

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"We are trying to invite industry to set up a green methanol production facility at Kandla port. The problem is that, being a new sector, there are bankability issues, like financial viability issues. We are working on a model where we give them an assured offtake," he said, speaking on the sidelines of the India Maritime Week in Mumbai.

Under the likely contract, the port may provide assurance that whatever is produced, they will take it or pay for it, so that will ensure the production is viable for the companies.

"We will act as an aggregator of green methanol as a fuel for all the major ports," Singh said.

Deendayal Port has major plans to set up shipbuilding and ship repair facilities.

New wave of deals

Earlier, Cochin Shipyard and Deendayal Port had signed a memorandum of understanding (MoU) with plans to set up a new ship repair ecosystem in partnership.

Under the partnership, plans are to set up a ship repair cluster at Vadinar, with a total investment of Rs 1,750 crore. Deendayal Port will be contributing around Rs 700 crore, and Cochin Shipyard the rest.

The state-owned Deendayal port had also rolled out plans to set up a shipbuilding cluster at Kandla. However, the tender for the construction had to be cancelled earlier this year after receiving only one bid.

Singh says that they tried to leverage the assets they had, like land parcels and waterfront.

"We tried to offer it to the market and test the market whether players are willing to come to this place and use this land and waterfront to set up this shipbuilding facility," he explained.

The idea was to build very large crude oil carriers (VLCC), but there was hardly any response from the market, as companies wanted clarity and certainty on the policy front.

The apprehension among the players was also that the cost of manufacturing would be 20-40 per cent higher, compared with established global players, said Singh.

That hopefully should change now, he feels, with the Union Cabinet in September approving a close to Rs 70,000 crore package to boost shipbuilding, he said.

The government has a four-pillar approach to strengthen the domestic shipbuilding capacity. This includes long-term financing, promoting greenfield and brownfield shipyard development, skilling, and legal and policy reforms.

Kandla Port is now exploring plans to build mid-size ships in a change of strategy. It is also looking at a possibility to establish a shipbuilding facility on an EPC (engineering, procurement and construction) basis, according to Singh.

"We will be investing money to create a shipyard, and then we will open it up to the shipbuilders to come there and operate," he said.

Recently, Garden Reach Shipbuilders had signed an MoU with several partners, including Deendayal Port, to explore and jointly develop projects across domains, including shipbuilding.

Maritime