APM Terminals awaits clarity on extension of Pipavav port lease: MD

India's first private sector port project is awaiting clarity on a pending request for a lease extension before charting out on further investment. According to officials from APM Terminals Pipavav, the 30-year lease of the Pipavav port is due to expire in September 2028. Speaking to ET, Jakob Friis Sorensen, Managing Director, APM Terminals Pipavav said that the law allows Gujarat Maritime Board to extend the lease by another 20 years.
“Being the first Public Private Project (PPP) of the port sector in India, whatever they do in Pipavav, is going to be a precedent for the rest,” Sorensen said.

The Hague, Netherlands-headquartered APM Terminals is the independent ports and terminals arm of Danish maritime giant A.P. Moller-Maersk Group. APM Terminals had acquired controlling stakes in Gujarat Pipavav Port, the company incorporated for operating and maintaining the port at Pipavav, in 2005.

APM has been pushing for a lease extension after it announced a Rs 700 crores capacity expansion programme at Pipavav in 2020. The plan is to increase the container capacity from 1.35 million twenty-foot equivalent units (TEUs) to 1.6 million TEUs.

“We have already committed to invest Rs 700 crores in upgrading our container capabilities in Pipavav. That has been done on the expectation that our concession in Pipavav will be extended,” Sorensen added.

He said that APM Terminals would like to begin spending more money in Pipavav, but any private company would like to see a longer horizon than the 5 years they have left. “The Rs 700 crores that has been committed so far is a small part of what we have up our sleeves if we get the concession extended,” he said.

Sorensen also said that the company is also looking at building warehouses in Pipavav.

Commenting on the global container shortage, he said that it is expected to ease closer to the end of the year. Sorensen also said that the freight tariff at the Dedicate Freight Corridor will have to come down by 20% to make the route favourable. The Gujarat Pipavav port is the first in the country to have direct connectivity to the DFC.