Sanjay Sethi, the IAS officer who steadied J N Port and took it to new heights, demits office
MUMBAI : Maharashtra cadre Indian Administrative Service officer Mr. Sanjay Sethi, demitted office as Chairman, Jawaharlal Nehru Port Authority (JNPA) on Tuesday after an eventful five-year term, a period marked by the biggest pandemic the world has seen in decades that roiled trade, transformed India’s biggest state-owned container gateway into a landlord port, managed good industrial relations with staff and laid the groundwork for expansion beyond Nhava Sheva into Vadhavan.
Mr. Sethi arrived at the port – one of the 12 owned by the Union government and named after India’s first Prime Minister Jawaharlal Nehru – on 2 January 2019, to take the reins, in the backdrop of a bit of a leadership crisis facing the premier port.
The port didn’t have a full-time Chairman for several months after the previous full-time Chairman, also an IAS officer, left abruptly a little more than one year into his five-year tenure.
Mr. Sethi steadied the ship and started working on many projects and initiatives aimed at improving and enhancing ease of doing business at the port, through process simplification, digitalization and infrastructure interventions such as the Centralized Parking Plaza that ultimately led to a big leap in efficiency parameters compared with the best in the world.
J N Port turns around container ships – a barometer of a port’s efficiency and productivity – in 22 hours, or 0.9 days, the World Bank’s Logistics Performance Index (LPI) Report, 2023, said. That’s way faster than peers in Singapore, Malaysia, Indonesia, and the UAE and the US.
It would not be a cliché to say that during the health crisis, Mr. Sethi led from the front, putting in place all the safety measures to ensure that the cargo, arriving at and departing from the port, flowed without much of a hassle.
One of Mr. Sethi’s biggest achievements, though, was the privatization of the container terminal, self-operated by the port authority and which was bleeding from operational losses of some Rs200 crores annually due to its stand-alone status in a business marked by vast network of terminals run by global operators.
The 1.5 million twenty-foot equivalent units (TEUs) a year capacity terminal, once operating at over 100 percent utilization, saw its fortunes dip over the years as new modern terminals, offering better productivity and efficiency in India’s busiest state-owned container port weaned traffic away. The import dwell time of the port authority-run box terminal was 52 hours while it was 25 hours in the rest of the port.
The port authority just didn’t have the marketing clout to attract shipping lines, leaving it with no other choice but to privatize the facility through the public-private-partnership (PPP) mode.
Privatization continues to be a sensitive issue in the public sector, particularly in ports where the employees are unionized. But Mr. Sethi managed to pull off the transaction with relative ease, taking the workers along with him in the exercise, and managing a handsome royalty per container from the successful bidder.
The container terminal privatization exercise also gave a glimpse of Mr. Sethi’s steely nerves to hold his ground and block Adani Ports and Special Economic Zone Ltd (APSEZ), India’s biggest private port operator, from participating in the tender citing a clause that bar firms involved in contract termination at other ports from participating. A coal handling terminal run by a unit of APSEZ at Visakhapatnam Port Authority was terminated in December 2020, a few years into its 30-year concession.
Mr. Sethi’s stand emboldened other state-owned port authorities to disqualify APSEZ from tenders, which it managed to reverse with the help of a favorable verdict from the Supreme Court.
While the Supreme Court upheld the decision of Jawaharlal Nehru Port Authority to disqualify APSEZ from its two tenders, it also ruled that the firm’s disqualification arising from termination of a contract at Visakhapatnam Port “shall not bar or act as disqualification for the petitioner (APSEZ) for future tenders floated by public bodies”.
The verdict stopped APSEZ from getting back into the reckoning, shattering its plan to have a presence in India’s busiest state-owned container port.
Port industry executives told ET Infra in private that it was the spectre of APSEZ’s participation that drove the winning bidder to quote a princely royalty of Rs4,520 per TEU.
From operational loss, the terminal is now making money for the port authority post privatization.
Under Mr. Sethi’s leadership, J N port also privatized the shallow water and coastal berths, securing a royalty share much beyond the port authority’s internal estimates, demonstrating how the PPP model can be deployed to create a win-win situation for the government and the private sector.
With these successful privatization deals, J N Port became India’s first state-owned port to be run on a landlord model, wherein the publicly governed port authority acts as a regulatory body and as landlord, while private firms carry out port operations, mainly cargo handling activities. The landlord port, in return, gets a share of the revenue from the private entities.
“Mr Sethi sought guidance and suggestions from experts and colleagues ahead of taking decisions. Hence, almost all his initiatives materialized,” Mr. Unmesh Wagh, Deputy Chairman, J N Port Authority said, referring to Mr. Sethi’s style of functioning.
“As a leader, he was always ready for course corrections if confronted with facts contrary to his beliefs. This is a rare quality which is absent in most of the able leaders,” Mr. Wagh added.
Mr. Wagh also said that Mr. Sethi “understood the spirit of PPP and designed the PPP projects in such a way that all of them got huge repose from bidders”.
His ability to take everyone into confidence while working is demonstrated by the absolute lack of protests from employees on sensitive issues such as PPP projects, Wagh pointed out.
Mr. Sethi, perhaps, will cherish in equal measure the efforts put in by him and the team to take the mega Vadhavan port project to a stage where it is on the verge of getting implemented.
Here also, he showed his deft, strategic thinking to win over the fishermen, farmers and locals opposed to the project by shifting the location of the project to 5-6 kms inside the sea from the previous onshore site.
Under the earlier plan to build the port onshore, the reclamation material was to be sourced from land, which involved cutting hills to source the sand, adding to the environmental concerns surrounding the project.
By choosing to relocate the project site to offshore from onshore, J N Port Authority managed to dilute opposition to the port project, improve the viability and operational efficiency of the planned port and reduce logistics costs.
The new offshore site for building Vadhavan port falls within the domain of the Central government and beyond the area of Dahanu Taluka, clearing the decks for a key approval that had the potential to derail the new port.
On 31 July 2023, the Dahanu Taluka Environment Protection Authority (DTEPA), granted a no objection certificate to J N Port Authority to develop Vadhavan port subject to various terms and conditions imposed by the Ministry of Environment, Forest and Climate Change (MoEF&CC) and its authorities.
The environment and coastal regulation zone clearances from MoEF&CC for the project is now within arm’s reach.
Port industry sources reckon that the “Vadhavan port project has reached such a stage that nobody can now think of reversing it.”
The construction of a new port at Vadhavan is key to the expansion plans of J N Port given the limitations on adding capacity at Nhava Sheva (where J N Port is located).
During Mr. Sethi’s tenure, J N Port’s total cargo volumes jumped from 70.7 million tonnes (mt) in FY19 to 83.8 mt in FY23 and from 5.13 million TEUs in FY19 to 6.05 million TEUs in FY23.
“Mr Sethi in a way has established a model template for other major ports to follow, be it in the area of providing best in class infrastructure, in terms of road connectivity or by achieving turnaround times of ships which are far better than peers in the region e.g. Singapore, Malaysia, Indonesia, and the UAE,” says Mr. Jagannarayan Padmanabhan, Senior Director, Transport, Logistics and Mobility at CRISIL.
“The strategy of making J N Port a landlord port has also played out well – leading to significant revenue enhancement for the Authority and at the same time leading to a significant cost saving. To maintain leadership position, he has been able to give the much-needed push for clearing the deck for commencement of construction of Vadhavan port,” Mr. Jagannarayan added.
The only regret that Mr. Sethi would likely harbor is that he couldn’t see the port getting linked to the Western Dedicated Freight Corridor (WDFC) as a crucial 102 km-long last mile stretch of the corridor from Vaitarana to Jawaharlal Nehru Port suffered unexpected delays. The DFC link will enable J N Port to run double stack container trains, improving productivity and efficiency in cargo evacuation by leaps and bounds.
On its part, the port has built a DFC compliant integrated common rail yard.
J N Port is estimated to be linked to the DFC by December this year.
Source: ET Infra