The working group report

(East Coast Canal along with rivers Brahmani & Mahanadi delta)
The total cost of development is estimated at Rs 1526 crores. Of this, Rs 677 crores is proposed during 11^th Plan period and the balance amount of Rs 849 crores during 12^th Plan period. In addition, a provision of Rs 78 crores for maintenance is proposed. Thus the total provision is Rs 755 crores.

i) Fairway Development

The proposed dimension for East Coast Canal is a bed width of 32 m and depth of 1.5 m with a side slope of 1:2.5 and that of rivers and delta portion is a bed width of 45 m, depth 2 m with a side slope of 1:5. The proposed work includes dredging, excavation and widening of canal, modification of locks and bridges, repair of roads, acquisition of land for widening, bank protection works etc. Construction of barrages is proposed only during 12^th Plan period. The total cost of work is estimated at Rs 422 crores.

2. 
   Navigational Aids
   

It is proposed to provide navigational aids for the entire stretch of Brahmani- Kharsua- Dhamra river portion and at conspicuous locations like structures/ bends etc in the canal and delta portion. The cost of work is estimated at Rs 11 crores.

2. 
   Construction of Terminals
   

Terminals are proposed at Talcher in Brahmani river and at Balasore, Rajnagar and Nasirabad in the East Coast Canal portion. The total cost of construction is estimated at Rs 242 crores. 100% public funding is proposed in the declaration proposal, however private sector participation to the possible extent would be explored in setting up of terminals.

2. 
   Setting up of Offices
   

It is proposed to set up offices at Dhamra and Charbatia. Provision of Rs 2 crores is proposed for this purpose.

v) Maintenance cost

Annual maintenance cost for fairway and terminals @ Rs 26 crores/ year for 3 years works out to Rs 78 crores. .
7.2.3 Development of NW-6 (River Barak-NE Area)
The draft Cabinet Note for declaring Karimganj- Lakhipur stretch of Kushiyara- Barak river (140 km) was circulated during July, 2005. The proposal is likely to be cleared by the Govt. during 10^th Plan. Accordingly, following provisions ought to be made. In addition, a provision of Rs 12 crores for maintenance is proposed. Thus the total provision is Rs 58 crores.

1. 
   Fairway Development
   

The proposed dimension development of the Kushiyara- Barak river system is with a bed width of 40 m and depth of 1.6 m with a side slope of 1:5. The river is alluvial in nature like Ganga and Brahmaputra and therefore recurring dredging is required for maintenance of a navigational channel. Hence it is proposed to procure 2 CSD units and 1 HSD unit and 2 Survey launches. The total cost of this procurement is estimated at Rs 22 crores.

2. 
   Navigational Aids
   

Since both banks of the river are high banks at most of the places there exists a permanent channel and therefore conventional channel marking are proposed under annual maintenance proposal.

3. 
   Construction of Terminals
   

Terminals are proposed at Karimganj, Badarpur, Silchar and Lakhipur. The total cost of construction is estimated at Rs 23 crores. 100% public funding is proposed in the declaration proposal; however private sector participation to the possible extent would be explored in setting up of terminals.

4. 
   Setting up of Offices
   

It is proposed to set up offices at Karimganj and Silchar. Provision of Rs 1 crore is proposed for this purpose.

v) Maintenance cost

Annual maintenance cost of fairway and terminals @ Rs 4 crores/ year for 3 years works out to be Rs 12 crores. Thus the total cost of work shall be Rs 58 crores.

4. 
   Other New Waterways
   

Some new waterways may be considered for declaration as National Waterways during 11^th Plan period. For Example Goa Waterways, Extension of NW-3 (Kollam to Kovalam in the south and Kottapuram to Kasaragod in the north), Sunderbans, DVC Canal and Narmada. A token provision of Rs 100 crores is proposed for undertaking preliminary works in these waterways after its declaration as National Waterways

7.2.5 Modal shift incentives and other new schemes
7.2.5.1 Incentive for IWT Operators
It is proposed to introduce incentives to the IWT entrepreneurs @ 20 paisa/ tonne-km for movement of cargo through the national waterways, due to non-availability of sufficient infrastructural facilities. Payment of this incentive is proposed till IWAI make the existing national waterways financially viable with provision of mechanical loading/ unloading facilities at all the terminals. A provision of Rs 100 crores (@ 20 paise per tone-km for 5 btkm incremental movement) is proposed to meet this requirement.
7.2.5.2 New Scheme for Unorganized Sector
The Inland Vessel Building Subsidy Scheme is not applicable to country crafts (Bhut-Bhutis in North-East). It has been observed that in NER and in other parts of the country a lot of transportation activity (both passengers and cargo) takes place through small country crafts of upto 40-50 ton capacity. Mechanization of these small vessels and fitting appropriate safety devices/ appliances on board will improve the productivity of these vessels, bring down transportation cost, improve overall transportation efficiency and make IWT operations safer. Hence, there is a need to introduce a new scheme for mechanizing the country crafts, fitting safety appliances thereon etc. This will also facilitate poverty alleviation through employment generation and enable remote area connectivity. The funding pattern suggested is 50% by Govt. and 50% by the owner of Bhut-Bhuti. The Govts share will be met fully by the Central Govt. Further details and modalities of implementation of the Scheme will be worked out in consultation with the state Govts and NEC in case of North Eastern Region. Out lay proposed is Rs. 50 crore. Corresponding EBR share will be Rs 50 crores.
7.2.5.3 Vessel leasing Special Purpose Vehicle (SPV)
IWT operators are by and large averse to the financial risk of owning IWT vessels at this stage of development. They would feel comfortable, if vessels are available in the market on lease basis. To facilitate this, a SPV is proposed to be formed with IWAI partnering with reputed financial Institutions. IWAI’s contribution may be pegged at Rs. 100 crore equivalent to 40% equity contribution in the JV that would manage vessel leasing operation. Accordingly, an outlay (Budgetary Support) of Rs. 100 crore is proposed on this account. Corresponding Extra Budgetary Resources (EBR) provision shall be Rs 525 crores @ Debt Equity Ratio (DER) of 3:2.
7.2.5.4 Dedicated IWT Development Fund (for JV of acquisition of vessels)
IWAI Act provides for equity contribution for various types of JV projects and the IWT policy stipulates upper limit of 40% on IWAI’s participation in such JV’s. In order to effect modal shift in favor of IWT it is proposed to promote vessel acquisitions through JV route. Thus, it will be desirable to have a dedicated IWT corpus fund built up through budgetary support and through contribution made by FIs, one of whom could be Fund Manager as well. This corpus could be used for funding JV projects for acquisition of vessels @ 3:2 DER. An outlay of Rs. 500 crore (Budgetary support) is proposed on this account. Corresponding EBR is Rs 2625 crores @ DER of 3:2.
7.2.5.5 Funding for composite Transportation projects
Ministry of Finance has issued guidelines for viability gap funding for infrastructure development under public- private partnership projects. It is proposed to introduce a new scheme for funding of composite transportation projects in the IWT sector. The funding would be limited to a maximum of 40% of project cost. The composite projects would comprise infrastructure facilities (terminals with mechanical loading/ unloading facilities), vessel acquisition and operation between identified origin and destination pairs. An outlay of Rs 100 crore (Budgetary support) is proposed for meeting the viability gap funding for composite transportation projects. The corresponding EBR component shall be Rs 150 crores.

Summary of New Schemes

(Rs in crores)

Sl#	Scheme/ Project	BS	EBR	Total
1	New National Waterways
(i)	National Waterway-4 (Kakinada- Pondicherry canal along with rivers Godavari & Krishna)	575	0	575
(ii)	National Waterway-5 (East Coast Canal along with rivers Brahmani & Mahanadi delta)	755	0	755
(iii)	National Waterway-6(River Barak -NE Area)	58	0	58
(iv)	Other New Waterways	100	0	100
2	Incentive for IWT Operators	100	-	100
3	Mechanization of country crafts ( Bhut-bhuties)	50	50	100
4	Vessel Leasing Special Purpose Vehicle (SPV)	100	525	625
5	Dedicated IWT Development Fund (JV for vessel acquisition)	500	2625	3125
6	Funding for composite transportation projects	100	150	250
	Total	2338	3350	5688

Summary of 11^th Plan proposals

(Rs in crores)

Details	BS	EBR	Total
Ongoing Schemes	3642	2170	5812
New Schemes	2338	3350	5688
Total	5980	5520	11500

Rs 11500 crores
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Annex I(a)

MINUTES OF THE MEETING OF SUB GROUP I (INLAND WATER TRANSPORT) OF THE WORKING GROUP ON SHIPPING AND IWT FOR FORMULATION OF 11^TH FIVE YEAR PLAN (2007-12) HELD ON 24.7.2006
1) The first meeting of the Sub Group was held under the Chairmanship of Chairman, IWAI in the conference room of IWAI, Noida office on 24.7.06 at 1100 hrs. List of participants is at Annexure.

2. 
   At the outset, Chairman IWAI welcomed the members and gave a brief account of the current status of IWT sector in the country. IWT being a fuel efficient, environment friendly and cost effective, mode, the Govt. has been trying to develop this mode. However, this mode is yet to find its rightful place and attain visibility in most parts of the country, Chairman observed. With these opening remarks, Chairman requested the Vice-Chairman to initiate discussions.
   

2. 
   Vice-Chairman observed that the time is ripe for taking a qualitatively different approach to formulation of 11^th Plan; as there is now visible movement on national waterways; large scale IWT movement is in offing; Action plan for making 3 NWs fully operational has been prepared; Ports are getting congested necessitating better hinterland connectivity through IWT etc. Further, IWT has been identified as a Thrust Area by the PMO, whereby efforts ought to be made to enhance the modal share of IWT to atleast 2% from the present level of less that 1%. He exhorted the Members to give their views on each terms of reference in this meeting and thereafter follow it up with inputs/suggestions in writing, so that draft report could be discussed in the next meeting.
   

2. 
   Shri Purandare, Additional Director, CWPRS, Pune, suggested that since Goa waterways contribute maximum in terms of transportation of cargo by IWT mode, the Govt. should give adequate attention for developing waterways in Goa. Shri D’costa, Honorary Secretary, Goa Barge Owners Association (GBOA) informed that the Goa waterways transported about 36 million tonne of cargo, mainly consisting of iron-ore and coal during 2005-06. He also informed that GBOA has recently recommended to the Goa Govt. that the State Govt should take initiative in requesting the Central Govt. for declaration of Goa waterways as national waterways. He also informed that there was earlier a proposal for declaration of Goa waterways as national waterways which was not agreed to by the State Govt. of Goa, mainly due to lack of unanimity on the revenue sharing issues between the Central and the State Govt. in the event of the waterways getting declared as a National Waterway. He further informed that at that time, the State Govt. had constituted a committee to suggest the modalities of revenue sharing. GBOA was also a member of that Committee. However ultimately non consensus emerged. The representative of GBOA added that there are about 250 barges, many of them are over 2000 DWT with 3.2 m loaded draft. Adequate depth is not available all the time in Goa waterways to accommodate these barges, which wait for high tides, losing valuable voyage time in the process. Hence there is a felt need to provide adequate LAD, as also night navigation aids, but the State Govt has done very little about it. He suggested that in case the waterways are declared as National Waterway, the Central Govt. through IWAI will take up fairway maintenance activities which will help the Goa waterways in particular and IWT sector in general. Representative of GBOA also informed that the total length of Goa waterways is approximately150 km, out of which operations take place presently on about 100 kms.
   

In this context, V.C, IWAI suggested GBOA to provide details in respect of Goa waterways as under:

1. 
   Present length of the navigable waterways in Goa which could be declared as a National Waterway.
   
2. 
   Additional length of waterways which could be added;
   
3. 
   Pre-requisites in terms of developmental works to be taken to make them navigable.
   
4. 
   Constraints/difficulties in terms of up-gradation of infrastructure, modification of bridges, land acquisition etc.
   
5. 
   Minimum vertical and horizontal clearances required.
   
6. 
   Financial implications.
   
7. 
   Additional contribution to IWT that would be made.
   
8. 
   Approximate quantity and frequency of dredging required.
   
9. 
   Whether barge size can be increased without increasing the draft of the waterway.
   
10. 
    Issues relating to dumping of dredged material, fishermen problem etc. likely to be encountered while developing the waterway in Goa.
    

5) Vice-Chairman observed that expenditure on dredging is a public expenditure, which could be minimized if we have appropriate design for large size barges keeping the draft at present LAD level in Goa waterways. Thus there is need for R&D in this area. Support from Govt. would be there for such R&D activity in case Industry comes forward in pursuit of this. Vice-Chairman, IWAI urged GBOA to take it up with Shipyards in Goa Region, in which case Govt./IWAI could consider funding that project.

6) Chairman, KoPT informed that design of flat bottom low draft barges of higher capacities may be available with Russia and with some other countries. This could be explored if we have bi-lateral co-operation, with these countries. There is need for bilateral co-operation, Chairman KoPT observed.

7) Vice-Chairman, IWAI observed that for IWT to become cost effective, it appears necessary that IWT and coastal shipping are integrated. Keeping this in view, perhaps there is a case for extending Inland Vessel Building Subsidy regime to cargo vessels of more than 2000 DWT, which can ply in both coastal and inland waters. Chairman, KoPT stated that as per the existing guidelines of the Inland Vessel Building Subsidy Scheme, subsidy of 30% is available for the vessels up to 2000 DWT and for vessels more than 2000 DWT no subsidy is available. He suggested that in view of encouraging addition of larger vessels on national waterways, the Sub Group may recommend that the subsidy may be allowed to the inland vessels of size bigger than 2000 DWT under the existing subsidy scheme itself which can be limited to the subsidy allowed for 2000 DWT vessels.

8) Representative of GBOA informed that due to addition of many barges in Goa in last 2-3 years, there is spare capacity of barges in Goa and therefore, it is possible that some of the owners of the barges may be interested in transferring the barges from Goa to National Waterway-1 for operation in these areas. However, such a transfer would roughly cost Rs.25 lakhs per barge which needs to be subsidized in the interest of IWT promotion.

9. 
   Representative of NCAER suggested that IWT development is sensitive to cost of capital. He suggested that Govt. could consider providing subsidy to old barges from Goa region shifting to Kolkata region for IWT operation.
   
10. 
    Representative of NCAER also stated that development of IWT has a lot of potential in terms of development of under developed hinterland through which most of the waterways particularly the Ganga and the Brahmaputra pass through. Therefore, development of NW 1 & 2 will benefit development of under developed States such as Bihar, U.P, Jharkhand, West Bengal, Assam etc. He therefore, suggested that importance of IWT in developing the hinterland may be suitably incorporated in the report of the Sub Group. Vice-Chairman, IWAI observed in this context that NCAER/CSO could be involved for undertaking a study covering this aspect.
    
11. 
    Shri Sen of West Bengal Surface Transport Corporation (WBSTC) suggested that construction/procurement of IWT cargo and passenger vessels should also be included in the CSS under which 90% grant is provided by the Central Govt. Chairman, KoPT observed in this context that usually such a support is not considered desirable, as vessels are not treated as an infrastructure. However, in case of IWT (which is under developed unlike Road and Rail), there should be a special dispensation. Vice-Chairman, IWAI observed that there could be two ways of going about it - 90% grant under CSS or 30% vessel subsidy; both may not be possible together.
    
12. 
    On the terms of reference pertaining to private sector participation in IWT sector, Chairman KoPT informed that private sector participation policy was formulated by the KoPT about two years back. Under this policy, several IWT jetties are being developed in Kolkata through private sector participation. Vice-Chairman, IWAI requested Chairman, KoPT to provide copy of this policy to IWAI. While on this point, Member (Cargo), IWAI stated that one of the stumbling blocks in movement of cargo through IWT mode on NW-1 is high wharfage charges being levied by KoPT, which is as high as Rs. 50 per tonne in some cases. Vice-Chairman, IWAI also observed that wharfage charge is too high for iron dust. Chairman, KoPT assured to look into this and do the needful.
    

Representative of GBOA suggested that virtual jetty, floating crane etc. should also be eligible for subsidy.

9. 
   Shri Sugan Singh, Director (Transport), Planning Commission stated that expenditure of IWT sector in the first four years of 10^th Plan is well below the outlay. Also, not a single viable stretch has been developed so far nor a single private sector project has been awarded. External aid component has also not been utilized. He added that so far IWAI has been concentrating on small projects only and there is time and cost overrun in many cases. He therefore suggested that in the 11^th Plan, comprehensive projects need to be developed. He also suggested that bankable project should be developed to attract private sector participation during 11^th Plan. He added that the approved 10^th Plan outlay for CSS for IWT was only Rs. 20 cr and the expenditure has already exceeded it. He, therefore, proposed that during 11^th Plan, adequate provision for CSS should be there. Director (Transport), Planning Commission also observed that any scheme/project having an outlay less than Rs.50 crore ought to be weeded out. Further, he observed that this time there should be adequate outlay for new NWs
   
10. 
    Vice-Chairman, IWAI requested the representatives of the State Govts. to suggest the outlay under CSS to be proposed for the 11^th Plan. He also informed that IWAI is now contemplating formulation of single comprehensive projects for the proposed new National Waterways, as desired by the Planning Commission. As regards the existing NWs, a detailed action plan has been chalked out for making them fully functional. Accordingly, we will have to move ahead even though there are a number of small projects therein.
    
11. 
    Referring to TOR (iii) wherein there is a mention of “feasibility of interlinking of waterways favorable for uninterrupted IWT”, Vice-Chairman, IWAI sought the views of representative of CWC and requested to provide a self contained write up detailing out what has been done so far, how interlinking will help IWT, whether interlinking will impact existing NWs etc.
    
12. 
    In respect of private sector participation, representative of NCAER stated that they have done a study on economic viability of IWT sector for IWAI whereby it has been concluded that there would be requirement of viability gap funding for IWT operations in initial stages. Member (Cargo) IWAI also stated that viability gap funding for IWT operation needs to be provided during the 11^th Plan for making IWT operations viable.
    

Vice-Chairman, IWAI, informed that viability gap funding scheme already exists However, the pre-requisite is that it has to be a composite project comprising both infrastructure and operation. Vice-Chairman desired that a copy of the guidelines should be passed on to GBOA.

17) There was a detailed discussion on the efficiency, safety, fuel consumption aspects of IWT. Chairman, KoPT observed that IWT operations are not cheap primarily on account of low speed, low productivity of IWT vessels. To tide over these bottlenecks, there is a felt need to install tidal gauge stations at appropriate places on the NWs. Further, there is a felt need to take speed enhancing measures so that average speed of IWT vessels increases to at least 11 knots from the current average of just 8 knots. Chairman, KoPT further observed that unlike Merchant Shipping, IWT sector does not seem to be having published charts which would help navigation. Also, VHF sets should be there on board IWT vessels in order to ensure safe navigation. Responding to these suggestions, VC, IWAI observed that the productivity/speed issues will be discussed separately with Naval architects.

18) The representative of GBOA proposed that the representatives of Coastal Conference and Goa Mineral and Iron-ore Association should also be co-opted.

19) Summing up the discussion, Chairman IWAI requested the participants to submit their inputs/suggestions in writing by 14 Aug. 06, so that draft report of the Working Group is prepared and circulated among the members ahead of the next meeting of the Sub Group around 15 Sept. 06.

20) The meeting ended with the vote of thanks to the Chair.

******

Annexure