GUJARAT MARITIME BOARD - roro-ferries-in-gulf-of …roro-ferries-in-gulf-of-cambay.com/dls/rrfigoc/GMB_Feasibility... · terms of time saving and distance saving vis-à-vis existing

July 2012

GUJARAT MARITIME BOARD

RO-RO FERRY OPERATIONS PHASE 1 ACTIVITIES

FINAL REPORT

Gujarat Maritime Board (GMB) Service between Dahej & Gogha Ro-Ro Ferry Operation Phase 1 Activities Final Report

RoRo Ferry Operation Phase 1 activities Final Report 01-Aug-2012.doc Beckett Rankine 1

CONTROLLED DOCUMENT STATUS

PROJECT TITLE Development of a Ro-Ro Ferry Service between Gogha and Dahej

DOCUMENT TITLE Phase 1 Activities Final Report

DOCUMENT REF

REVISION RECORD

STATUS DATE SUMMARY OF CHANGES PREPARED APPROVED

Issue 1 DRAFT

27/05/12

- SMS

GAR

Project Director

Name

Gordon Rankine



CONTENTS

01.0 STATUS REPORT

02.0 FERRY OPERATIONS

2.1 POTENTIAL COMPETITIVENESS

2.2 LIKELY FARE PATTERN

2.3 FERRY FARE MECHANISM (Guidelines)

2.4 TARIFF MODEL

� FERRY

� TERMINAL

� COMBINE

2.5 OPERATION MODEL

� FERRY

� TERMINAL

� COMBINE

2.6 VIABILITY IMPROVEMENT OPTIONS

2.7 NAVIGATION REQUIREMENTS IN

RELATION TO VTMS

2.8 VESSEL DOWNTIME

03.0 FERRY OPERATORS:

3.1 LEVEL OF SERVICE

3.2 QUALIFICATION CRITERIA

3.3 TENDER ASSESSMENT CRITERIA

3.4 PERFORMANCE ASSESSMENT CRITERIA

3.5 INTERACTIVE ISSUES WITH EPC AND

DREDGING CONTRACTOR

04.0 CONTRACTUAL AND REGULATORY ISSUES

05.0 FINANCIAL & BUSINESS MODELS

5.1 FERRY OPERATION

5.2 TERMINAL OPERATION

5.3 COMBINED


RoRo Ferry Operation Phase 1 activities Final Report 01-Aug-2012.doc 3 Beckett Rankine

Annexures

Volume 1

Annexure A: Financial Models

Volume 2

Annexure B: Brochure for Roadshow Annexure C: Advertisement Copy for Roadshow

Print Media Websites

Annexure D: Expression of Interest Document Annexure E: Report on Mumbai Roadshow Programme Annexure F: Report on London Roadshow Programme Annexure G: Roadshow Report



1.0 STATUS REPORT

In consultation with, and approval of Vice Chairman and Chief Executive Officer of GMB, dates and location for Roadshow cum Workshop have been fixed. The first of the two roadshows will be held at Hotel Hyatt Regency near international airport in Mumbai on 11th June 2012. The program of the day is as given in Annexure E. The brochure for the Roadshow and registrations forms have been finalized by GMB as attached in the Annexure B. Prior to the first roadshow, a voyage by sea from Gogha to Dahej by GMB and Beckett Rankine team is also planned for 9th June 2012. The second roadshow is being held in London on 28th June 2012. During the visit of GMB team for London roadshow, arrangements are also being finalised for their visits to Dover ferry terminal and a ride in a ferry in river Thames. The advertisement for the roadshow was placed both in Indian media and on the following websites. The copy of print media advertisement as appeared in the Ahmadabad Edition of Economic Times is also attached as Annexure C. The copy of the advertisement as it appeared on the websites is also given in Annexure C.

Lloyds List Website The Maritime Journal The Daily Shipping Times The Shipping Tribune

Following is the tentative program for further activities subsequent to roadshows

Details Date

Receiving of EOI July 2012 Issue of RFQ 15/7/2012

Receiving of RFQ 15/8/2012

Declaration of qualified parties 21/8/2012

Issue of RFP 25/8/2012

Receive and opening of RFP 15/9/2012 Award of contract 30/10/2012

Five months for mobilization of vessel and start ferry operation

30/3/2013



2.0 FERRY OPERATIONS 2.1 POTENTIAL COMPETITIVENESS

Due to its particular geographical configuration, the area around the Gulf of Cambay would benefit from the operation of a Ro-Ro ferry service. A ferry network will speed up travel between Saurashtra and south Gujarat with a reduction in distance for journeys around the gulf. This is in line with the Port policy announced by the state government of Gujarat. The circuitous road distance around the gulf between the proposed terminals of Gogha and Dahej is about 360 Km. The sea distance between terminals is approximately 32 km.

It is essential to understand the competitive advantage that the proposed project has in terms of time saving and distance saving vis-à-vis existing means of travel

Thus to identify the hinterland a detailed study was done to analyse the saving in distance that the Ro-Ro service can offer compared to existing mode of travel. The following table presents the savings in kilometers for travel between key pockets relevant to the study

Comparison of direct road connectivity and using Ro -Ro service

Table 2.1.1 Distance saving using Ro-Ro service (km )

Point 1 Point 2

Travel via Direct Road Connectivity

(km)

Travel via Ro-Ro Ferry

(km)

Saving Using Ro-Ro ferry

(km) Bharuch Bhavnagar 269 68 201

Bharuch Amreli 361 182 179

Bharuch Junagadh 454 279 175

Bharuch Porbandar 542 367 175

Bharuch Rajkot 362 238 124

Bharuch Jamnagar 451 327 124

Bharuch Dhandhuka 222 162 60

Bharuch Surendranagar 261 222 39

Bharuch Bhuj 518 471 47

Vadodara Bhavnagar 196 143 53

Vadodara Amreli 301 257 44

Vadodara Junagadh 391 353 38

Vadodara Rajkot 289 315 -26

Vadodara Jamnagar 378 402 -24

Vadodara Porbandar 469 444 25

Discussions with various end-users have indicated that if there is a saving of more than 100 km they will consider a switch to Ro-Ro since this will offer significant time saving on account of additional time required by road compare to ferry travel.



Data from the previous table also suggests that for all the traffic that moves between Bharuch and Bhavnagar/Amreli/Junagadh/Rajkot/Jamnagar/Porbandar in Saurashtra can be considered as relevant traffic for the Ro-Ro service. The relevant time saving for movement within the identified pockets of the hinterland for various vehicle categories has been studied and is summarized in the following table:-

Table 2.1.2 Travel Time saved *using Ro-Ro service (hh:mm)

Vehicle Category

Bharuch – Bhavnagar

Bharuch – Amreli

Bharuch –

Junagadh

Bharuch – Rajkot

Bharuch –

Jamnagar

Bharuch – Porbandar

Car 4:01 3:34 3:42 2:28 2:28 3:29 Bus 5:01 4:28 4:38 3:06 3:06 4:23 LCV 4:28 3:58 4:07 2:46 2:45 3:54 Trucks 5:01 4:28 4:38 3:06 3:06 4:23 Multi-Axle 8:02 7:09 7:24 4:57 4:57 7:00

2.2 LIKELY FARE PATTERN

Getting adequate earnings is essential for success of any project and the same holds true for the upcoming Ro-Ro project coming up in Gujarat. In this case the only source of earning is Ferry Fare. Comparative analysis could have been the starting point but this being first of its kind project in India there is no data available to study tariff models. However Ro-Ro Ferry is a commonly used mode of transportation in many parts of the world especially Europe and South East Asia and prevailing tariffs at some of these terminals in the world give an idea on key aspects of tariff and tariff model.

The following tables illustrate tariffs/fare at some of the leading Ro-Ro terminals in the world:-

Sample 1

Geography: Europe Route: Dublin – Holyhead Crossing Time: 3 hours 25 minutes Ferry Operator: Irish Ferries Mode Fare (Rs.) Additional Passenger

Foot Passenger 2064 Additional Passengers -

Adults – Rs. 1950

Children – Rs. 1105

Passenger Car (Upto 1.9 meter high) 8579 Passenger Car (Upto 2.25 meter high) 8579

Passenger Car (over 2.25 meter high) 8579

Motorcycle 3999

Bus (over 8 meter long) 13416 Note: Above fares have converted into Indian Rupees (Rs.) at the exchange rate of 1 Euro= Rs. 65



Sample 2

Geography: North America (Canada) Route: Tsawwassen - Swartz Bay Ferry Operator: BC Ferries

Mode Fare (Rs.)

Passenger

Adult (12 years or older) 641

Children (from 5 to 11 years of age) 326

Infant (under 5 years of age)

Passenger Vehicle - Excludes Driver & Passengers

Vehicle Length up to 20 feet 2126

- extra length rate over 20 feet (per foot) 241

Motorcycle 1069

BUS - per foot (licensed to carry 16 or more passengers) 173

COMMERCIAL - per foot (vehicles over 5500 kg/GVW) 241

Bicycle or stowage 90 Note: Above fares have converted into Indian Rupees (Rs.) at the exchange rate of 1 CAD= Rs. 49

Sample 3 Country: Scotland (2006 fares)

Route Eriskay – Barra W Bay – Rothesay

Vidlin – Whalsay (Shetland)

Distance 10 km 11 km 10 km Passenger Fare (Rs.) 475 306 129 Car (Rs.) 1402 1225 164 Commercial Vehicle (Rs.) 383 / half meter 247 / half meter 58 / half meter

Note: Above fares were converted into Indian Rupees (Rs.) at the exchange rate of 1 GBP= Rs.86



Sample 4 Geography: Europe (2005 fare)

Route Summer Winter Half meter Passen

ger (Rs.)

Car (Rs.)

Passenger (Rs.)

Car (Rs.)

Commercial Vehicle (Rs.)

Oban / Castlebay / L’boisdale 1565 5734 1217 4959 999

Castlebay / L’boisdale 446 2596 446 2596 515 Uig / Lochmaddy / Tarbert 709 3410 632 2906 562 Ullapool / Stornoway 1089 5347 907 4262 803 Berneray / Leverburgh 403 1837 403 1837 494 Barra / Enskay 426 1259 426 1259 344

Note: Above fares have been converted into Indian Rupees (Rs.) at the exchange rate of 1 GBP= Rs.77.5

The following vehicle type descriptions and passeng er rules apply on Dover - Dunkirk route:

Vehicle type Description Car / Motorhome under 2.4m high

This vehicle type includes all standard car types including saloon cars, estate cars, and 4x4's with or without a roof box or a roof rack where the total height is less than 2.4 meters. This vehicle type also includes motorhomes that are less than 2.4 meters in height; with a maximum of 9 passengers allowed to travel with this vehicle type.

Car / Motorhome over 2.4m high

Passenger vehicle, as defined above, over 2.4 meters; with a maximum of 9 passengers allowed to travel with this vehicle type.

Van under 2.4m high

A van is defined as a motor vehicle with panelled sides and is designed for commercial purposes, irrespective of commercial or private use; with a maximum of 9 passengers allowed to travel with this vehicle type.

Van over 2.4m high Van, as defined above, over 2.4 meters in height; with a maximum of 9 passengers allowed to travel with this vehicle type.

Motorcycle Fare includes 2 passengers; with a maximum of 2 passengers allowed to travel with this vehicle type.

Bicycle (one only) Push bike with one passenger only, maximum one passenger.

Car with caravan or trailer

Car towing a caravan or trailer; with a maximum of 9 passengers allowed to travel with this vehicle type.

Minibus A minibus must have no more than 15 seats including the driver (maximum, no larger vehicles will be carried) irrespective of how many passengers travel; with a maximum of 15 passengers allowed to travel with this vehicle type.



Motorhome with caravan or trailer

Motorhome (with windows, sleeping and cooking facilities) towing a caravan or trailer; with a maximum of 9 passengers allowed to travel with this vehicle type.

Motorcycle with sidecar or trailer

Motorcycle with a trailer or sidecar. Fare includes 2 passengers; with a maximum of 4 passengers allowed to travel with this vehicle type.

As can be seen from few examples above, fare for even similar category of end-users is different for different terminals. This is broadly seen dependent on the distance between ferry terminals, type of ferry used, frequency of travel and arrangement between ferry operator/s and terminal operator/s.

There is also variation in categorization and classification of various end-users using Ro-Ro Ferry. For example if it’s a vehicle, tariff is dependent on length or height of the vehicle. In some instances, fare of passengers including driver is built in the tariff and in some other instances it is not. In none of the instances that have been studied, incident of fare being charged on gross vehicle weight has emerged. Similarly in case of passengers, variation is firstly due the cabin class in which they travel and secondly on age i.e. passengers across world have been broadly classified as adults(> 12 years old), children (<12 years) and in some case senior citizens (>60 or 65 years in age) with infants (<5 or 3 years) given a free passage. Usually fares for children or senior citizens are 60% of the adults.

In addition to above variation there are other variations arising depending on number of trips i.e. single journey or return journey or monthly pass. In some countries there are seasonal changes in fares i.e. different fares for summer, autumn, winter etc. This may or may not be relevant in present context where traffic density is more or less similar throughout the year.

All the fares tariff indicated in the previous tables have no direct relevance to upcoming facility at Gujarat and the tariff will emerge based competitive bidding



2.3 FERRY FARE MECHANISM (Guidelines)

This Ro-Ro Ferry service is going to be a unique one being the first of its type in the subcontinent and thus with no precedent is available to arrive at any definitive conclusion about various aspects especially the commercial aspects. This has necessitated looking at the baseline ferry fare calculation by application of first principle i.e. to arrive at an estimate of ferry fare that would be considered acceptable or affordable to end users.

A) For vehicles (i.e. Goods Carrier and personal v ehicles):-

An assumed i.e. essentially customised framework has been considered and created for assessing tariff. This model has taken into account competitive advantage that the proposed project is expected to offer vis-à-vis other modes of transport. The objective of this model has been to determine a tariff which could maximize the revenues.

For this, two broad aspects have been taken into account:-

I. Time benefit- In this saving in time has been analysed which will have an indirect impact on users permitting them to ply more often on the same route or some other route thereby generating additional revenue.

II. Price benefit- In this saving in cost to the users has been analysed by using Ro-Ro Ferry facility rather than travelling by road or rail around the Gulf of Cambay

Detailed approach and findings for calculating basic tariff considered are as follows:

a. Traffic count for various categories of vehicles along with their point of origin and destination was extracted from traffic revalidation study conducted earlier by Avalon. Findings for the same are presented in the following table

Ref. No

Through Bharuch, From / To>>>

Rajkot & Jamnagar

Junagadh &

Porbandar Amreli Bhavnagar Total

(i)

Average daily vehicle movement (Units)

2,289 607 1,258 1,876 6,030

Multi Axle trucks 164 40 90 150 444

Trucks 1229 299 672 1122 3,322 LCV 246 60 135 225 666 Buses 290 156 208 170 824 Passenger

Cars 360 52 154 210 776



b. For each vehicle category presently applicable cost of logistic of movement from Bharuch to various destination in the relevant hinterland in Saurashtra and vice versa were studied.

Total logistic cost includes fuel cost (which in turn depends on road distance), driver charges, maintenance and repair charges, toll charges etc. Information about toll charges on the connecting routes was collected from Akhil Gujarat Truck Transport Association, Ahmadabad. Incidental payments have not been considered in the cost calculation. Since for different category of vehicle the costs are different appropriate cost analysis for each vehicle category was carried out. Findings for same are as follows:-

Ref. No Through Bharuch to>>>

Rajkot & Jamnagar

Junagadh &

Porbandar

Amreli

Bhavnagar

(ii)

Road Distance through Existing Mode (Km)

362 454 361 269

(iii)

Minimum transportation cost *(incl. of fuel, maintenance, driver charges, cleaner etc.) in Rs per Km

Multi Axle trucks 17

Trucks* 12 LCV 7 Buses 12 Passenger

Cars 4

(iv)

Toll Charges on Existing Roads (Rs)**

Multi Axle trucks 436 596 100 100

Trucks 350 450 50 50 LCV 175 275 25 25 Buses 350 450 50 50 Passenger

Cars 95 140 15 15



Note:

* Information obtained from various trucking companies had indicated that average running cost for a truck is about Rs. 12 per km. (information valid for the last quarter of FY-2011-12). It was understood that the average running cost per km was arrived at by summing of the cost of fuel, repair & maintenance and salary of driver/cleaner etc. Detailed Breakdown as available is as follows:-

Fuel cost is Rs 9 per km (i.e. Price of 1 litre diesel / mileage of truck per litre =45/5=9)

Repair and maintenance cost is presently Rs 1 per km of running and cost of driver/cleaner etc. is Rs 2 per km of running. The average running cost for other vehicle category has been calculated using similar approach

**Toll charges unique to both the routes have been considered. Any toll booth common on both the existing route and inland road connecting Ro-Ro terminals to traffic centers have not been considered .

(v)= [(i)a*(iii)]+(iv)

Corresponding cost incl. of fuel, maintenance, driver charges, cleaner and toll Charges ) in Rs


Trucks 4694 5898 4382 3278 LCV 2709 3453 2552 1908 Buses 4694 5898 4382 3278 Passenger

Cars 1543 1956 1459 1091



c. This cost was then compared with total inland logistic cost for movement from Bharuch to Ro-Ro terminal at Dahej and then from Gogha to end destination using Ro-Ro facility and vice versa. Refer the following table :-

Note: * Interviews with trucking companies indicate that average running cost for a truck is about Rs. 12 per km. The average running cost per km is arrived at my summing the fuel cost, repair &maintenance and cost of driver/cleaner etc. Detailed Breakdown is as follows:- Fuel cost is Rs 9 per km (i.e. Price of 1 litre diesel / mileage of truck per liter =45/5=9) Repair and maintenance cost is Rs 1per km Cost of driver/cleaner etc. is

Ref. No Through Bharuch to>>

Rajkot &

Jamnagar

Junagadh &

Porbandar

Amreli Bhavnagar

(vi) Road Distance on Usage of Ro-Ro (Km)

238 279 182 68

(iii)

Minimum transportation cost* (incl. of fuel, maintenance, driver charges, cleaner etc.) in Rs per Km

Multi Axle trucks 17 Trucks* 12 LCV 7 Buses 12 Passenger Cars 4

(vii)

Toll charges on Usage of Ro-Ro (Rs)**

Multi Axle trucks 0 0 0 0 Trucks 0 0 0 0 LCV 0 0 0 0 Buses 0 0 0 0 Passenger Cars 0 0 0 0

(vii)= [(vi)*(iii)]+(vii)

Corresponding cost incl. of fuel, maintenance, driver charges, cleaner and toll charges ) in Rs




Rs 2 per km. The average running cost for other vehicle category is also calculated using similar approach **Toll charges unique to both the routes have been considered. Any toll booth common on both the existing route and inland road connecting Ro-Ro terminals to traffic centers are not considered

d. Netback / saving for each pocket using Ro-Ro facility were noted. This is presented in following table:-

e. Wor


Rajkot &

Jamnagar

Junagadh &

Porbandar

Amreli Bhavnagar

(viii)=(i)a-(vi)

Savings in Distance (Km) 124 175 179 201

(iii)

Minimum transportation cost (incl. of fuel, maintenance, driver charges, cleaner etc.) in Rs per Km

Multi Axle trucks 17 Trucks 12 LCV 7 Buses 12 Passenger Cars 4

(ix)=((iv)-(vii)

Savings in Toll charges on Usage of Ro-Ro (Rs)


(x)= [(viii)*(iii)]+(

ix)

Corresponding savings in cost incl. of fuel, maintenance, driver charges, cleaner and toll charges on usage of Ro-Ro in Rs


Rank 4 1 3 2



e. workings of the previous table indicate cost savings on usage of Ro-Ro facility. Savings for Junagadh & Porbandar cluster will be maximum followed by Bhavnagar and then Amreli whereas savings for Rajkot & Jamnagar cluster will be minimum

f. Data on cost savings for each pocket for various categories of vehicle was rearranged in ascending order. This was then multiplied with corresponding cumulative traffic volumes at each of these destinations. Tariff/Fare for upcoming facility was proposed for the option that yields maximum revenue. This is highlighted in yellow as option 1 in the following table.


Rajkot & Jamnagar Amreli Bhavnagar

Junagadh & Porbandar

(i)

Rank 1 2 3 4 Average daily vehicle movement (Units)

2,289 1,258 1,876 607


Trucks 1,229 672 1,122 299 LCV 246 135 225 60 Buses 290 208 170 156 Passenger Cars 360 154 210 52 Ref no d) c) b) a)

(xi)

Cumulative daily vehicle movement (Units)

6,030 3,741 2,483 607


Trucks 3,322 2,093 1,421 299 LCV 666 420 285 60 Buses 824 534 326 156 Passenger Cars 776 416 262 52

Ref no d)+ c) + b) + a)

c) + b) + a) b) + a) a)

(x)

Corresponding savings in cost incl. of fuel, maintenance, driver charges, cleaner and toll taxes on usage of Ro-Ro in Rs

Option 1 Option 2 Option 3 Option 4

Multi Axle trucks 2,544 3,143 3,517 3,571

Trucks 1,838 2,198 2,462 2,550 LCV 1,043 1,278 1,432 1,500 Buses 1,838 2,198 2,462 2,550 Passenger Cars 591 731 819 840



Note: Tariff in the previous table is only for vehicle and one passenger i.e. driver. Any additional passenger will have to be charged as per tariff suggested for passengers

g. For time saving an additional premium could be charged over and above the minimum for time saving an additional premium could be charged over and above the minimum tariff calculated, due to additional revenues that users would be able to generate by plying more no of times on same or some other route. However this has not been factored in the current analysis because large number of users have indicated that they will look at tangible benefits rather than intangible ones to shift to Ro-Ro from existing mode of transport

h. Incidentally price point which results in maximum revenue for the proposed facility also happens to be the point that attracts maximum traffic

i. A detailed financial viability will be carried out at demand at each of the above price points to assess viability of the project. This will be studied separately and analysed in detail in the module 3 and module 4 of the report in coming weeks.

j. In a scenario operating expenditure per day is more than total revenue generated in a day the pricing will be revised. Viability will then be carried out for second best price-traffic combination. This will be repeated over and over again to find the optimum point that will make this project viable

B) For Passengers:-

In order to understand the tariff that can be charged to the passengers who will patronize Ro-Ro service it is essential to understand the incentive that the proposed Ro-Ro facility will offer them to migrate from their current means of transport

Tariff for passengers for the proposed passenger ferry has been arrived by studying cost saving for each category of passenger. Time saving has not been factored in the calculation for tariff.

(xii)= [(xi)*(x)]

Corresponding Revenue (Rs. Cr.)

0.99 0.75 0.56 0.14

Multi Axle trucks 0.11 0.09 0.07 0.01

Trucks 0.61 0.46 0.35 0.08 LCV 0.07 0.05 0.04 0.01 Buses 0.15 0.12 0.08 0.04 Passenger Cars 0.05 0.03 0.02 0.00



The findings of the analysis are presented in the following table:-

Netback/ saving for Bhavnagar- Amreli poc ket using Ro-Ro facility

Note: Fares for private buses vary depending comfort, bus type, stops etc. For passengers travelling by train it has been assumed that once they migrate to Ro-Ro they will use private buses to travel to and from terminal

Passenger tariffs have been broadly classified into two segments:-

a) First class travellers which includes 3-tier, 2-tier AC train passengers

b) Second class travellers which includes all the passengers that travel by sleeper class in train, private and government bus.

Price point for 2nd class travellers was chosen for a combination that allows maximum traffic to get attracted to using Ro-Ro service. This is highlighted in yellow in the previous table. Thus a tariff of Rs. 128 for Adult and Rs. 64 for child is proposed for 2nd class passengers

For 1st class passengers, the saving for passengers of 3-tier AC train has been selected. This is highlighted in Blue in the previous table. Thus a tariff of Rs. 495 for Adult and Rs. 230 for child is proposed for 1st class passengers

Summary of Proposed Tariff for Passengers (Rs.)

Category Second Class First Class Adult 128 495 Child 64 230

An additional premium can also be charged over and above the minimum tariff calculated for time saving

Ref. No

Between Bhavnagar-Amreli and Bharuch

Train (Sleeper)

Train (AC 3-tier)

Govt. Bus ( non -AC)

Private Bus (Non-AC seater)

(i). Existing cost of travelling in Rs

Adult 249 645 158 220

Child 155 380 79 220

(ii)

Inland Logistics cost for travelling on usage of Ro-Ro in Rs

Via Private

Bus

Via Private Bus

Via Govt. Bus Via Private Bus

Adult 50 50 30 50

Child 50 50 15 50 (iii)=

[(ii)*(x)]

Corresponding saving via Ro-Ro in Rs.

Adult 199 495 128 170

Child 105 230 64 170



2.4 TARIFF MODEL There are two revenue generating centres from where tariff can be collected; one is the

entry point of terminal at both Gogha and Dahej and second one is the ferry vessel. 2.4.1 FERRY Ferry vessels would carry passengers arriving by public transport buses, motor car and

their passengers and goods carrier of various types and sizes including light commercial vehicle, single axle trucks and multi axle trucks. While tariff for each of the above category will get finally decided on selection of ferry operators, it would appear logical that each category of user will pay tariff equivalent to at least the cost expected to be incurred by him using surface / road transport. The determination of tariff is perhaps the single most factors in arriving at the viability of the ferry service. The ferry operator besides recovering its complete operating cost would look for not only a good return on actual investment but also returns on perceived risk. It would also be desirable for GMB not only to completely recover terminal operating and maintenance cost but get a significant contribution or good earnings. What is presented here is the model that is likely to be followed.

2.4.1.1 PASSENGER ARRIVING BY PUBLIC TRANSPORT Typically the world over the tariff is charged per individual per trip with discount /

concession given to senior citizens and children below a certain age; infants are generally carried free. The concession / discount are also often given for round trips and passengers buying ticket for a particular period popularly called season tickets or passes. Based on the business model the ferry operator may also choose to provide concession to a group of passengers travelling together (group fare). In present scenario it would be also logical to expect that the ferry operator may wish to reach a long term tie up with public transport operators (State Transport [S.T] & Pvt. Bus operators) and make arrangement such that passengers can get a single ticket for entire journey from the point of his initial embarkation in the bus to the point of his final disembarkation covering both the cost of travel by bus and the ferry. The passengers travelling by public transport i.e. S.T. or Pvt. buses will have to alight at the departing ferry terminal and then transported to ferry by shuttle buses. In this case also it is logical to expect that the ticket would include cost of transportation by shuttle buses at each terminal.

2.4.1.2 PASSENGER CARS & TWO WHEELERS The great convenience of Ro-Ro service is that cars & Two wheelers can be transported

from “Origin” terminal to the “Destination” terminal together with driver and passenger/s of the vehicle (in present case Gogha to Dahej and Vice a Versa). As mentioned above it is expected that the Car owners will readily pay amount equivalent to at least the cost



notionally saved by them due to reduction in distance of road journey. The ferry operator however may charge some incremental amount for each additional passenger beside the driver of the vehicle. The ferry operator may also charge differential tariff for different categories of cars such as medium and large size sedan, SUV’s etc.

2.4.1.3 GOODS CARRIERS Goods’ carriers come in variety of sizes including light commercial vehicles, single axel

trucks and multi axel trucks. The typical practice in most places is to charge on lane-meter usage, ferry decks being able to sustain the load of single or multiple axels.. The goods carrier however would be weighed for the ship master to know the total weight being carried.

2.4.1 TERMINALS In the present case the terminals, both at Gogha and Dahej are being built exclusively for

Ro-Ro / Ro-Pax ferry service and then again in the initial phase (consisting of several years) for exclusive use of ferry operator operating ferries between Gogha and Dahej. In later years, after the ferry service is well established and becomes popular, the terminals may be used for ferries operating to other destinations.

In view of foregoing, in the early phase, when terminals will be used exclusively for ferry

service between Gogha and Dahej, the source of revenue for terminal operators will be virtually from the tariff collected from the ferry operator (operating ferry between Gogha & Dahej) with some miniscule revenue coming from leased out terminal facilities to food courts and curio shops operators and billboard advertisers.

Even at later stage, when the terminals come to get used by ferry operators going to

different destinations, it would be convenient if the users are required to pay tariff to one agency namely the terminal operators.

2.5 OPERATION MODELS

In contractual / legal and administrative terms there are two distinct centres of operations viz. the Ferry Operation and the Terminal Operation. It is desirable that initially, and for some definite length of period, the Ferry Operation contract for Ferry Operation between the origin-destination pair of Gogha and Dahej is awarded to a single contractor on an exclusive basis. This requirement has been suggested by quite a few potential bidders.

The terminal operation is other distinct centre of operation and as there are two terminals, it is theoretically possible to engage two separate agencies to operate them. In practical terms however it would be desirable to engage only one agency for operation of both the terminals. In fact, and considering that the cost of terminal operation, at least in short to medium term future of 5-7 years, will have to be effectively cross subsidised by taking revenue from the Ferry Operation, and moreover, in the initial period the terminals will be



used exclusively by the Ferry Operator operating ferries between Gogha and Dahej, it may be desirable to give the terminal operation contract to the Ferry Operator with certain proviso. As expected, if the ferry operation becomes hugely successful, it is quite probable, indeed quite certain that the ferry operation between Dahej and other destination/s (and likewise Gogha and other destination/s) will commence. To cater to such eventuality, it would be desirable to make a provision in the terminal operation contract, especially, if given to the Ferry Operator (exclusively contracted to operate ferries between Gogha and Dahej) that the Terminal Operator will permit and facilitate ferry operations by other Ferry Operators who may come to operate ferries to other destinations, without let or hindrance and without deriving or giving any inbuilt commercial preference to the Ferry Operator already running the ferries between Gogha & Dahej.

2.5.1 FERRY OPERATION MODEL

The operating model for the ferry will essentially be determined by the ferry operator. It would be inadvisable to limit the ferry operator’s flexibility in so far it is not deviating from the regulatory requirements and generally in line with the international practice. In considered opinion of Beckett Rankine, only experienced Ferry Operators operating a similar ferry service elsewhere in the world will be able to operate this ferry service. Indian organization in collaboration with internationally established Ferry Operators with some form of Joint Venture (JVs) will be most ideal operators. It is reckoned that relation between GMB and the Ferry Operator and the other stakeholders will be in nature of following Interrelationship Organogram.



All ferry operations must be carried out under IMO and national regulatory conditions. It is important that this ferry operation is seen world wide as a prestigious first class service operating in India and therefore MUST be conducted in a safe, reliable and efficient fashion. The Ferry Operator beside providing ferry vessels (owned or leased by the operator) will have to provide and cater to following

• Daily routine maintenance of engine

• Periodic major maintenance and repair

• Daily cleaning and house keeping

• Supervising and assisting in loading and unloading

of vehicles in safe and systematic manner

• Supervising and assisting in Passenger boarding

and un-boarding in safe and systematic manner

• Providing and up-keeping of safety gears

Towards this end and as mentioned above the establishment of the organization / staffing structure is best left to the Ferry Operator, howeve, based on generally prevailing practice following typical organizational structure can be foreseen.

Should a ferry operator wish to bid for the Ferry Terminal management contract, this will be permissible, with the caveat that the terminal must be operated as a common user terminal and no favouritism or commercial advantage be given to their own ferry operation.



2.5.2 TERMINAL OPERATION MODEL Two first class Ro-Ro ferry berths and ferry terminals at Dahej and Gogha are being built. These have been carefully designed and will be constructed to provide a “turnkey” Ferry Terminal Operation to the Terminal Operator to be appointed to take over and operate the terminal. While initially and for some length of time there will be only one Ferry Operator operating ferries between Gogha and Dahej, in time to come it is quite probable, in fact nearly certain, that the terminals would come to get used for operating ferries from Dahej to other Destinations (and likewise Gogha to other destinations) by different ferry operator. It is imperative therefore that the Terminal Operation is covered by a separate contract regardless of it being given to the Ferry Operator. The Terminal operator will be expected to provide following services:

• Maintain the berths

• Maintain the linkspan & Pontoon

• Maintain the entire estate including the buildings, roads, marshalling yards, electrical system etc.

• Provide cleaning, housekeeping and sanitation services

While initially the berthing slot will be required for ferries operating between Gogha and Dahej at later period the Terminal Operator also will have to allocate and provide proper slotted berthing times to Ferry Operators operating ferries to other destination from Dahej and likewise from Gogha. However this will be exclusively GMB licensed Ferry Operator. These will be exclusively for GMB licensed ferry operators to use the berths and port facilities. The prospective Terminal Operators will be expected to show in their bid document exactly how they intend to manage the terminal. To assist in the bid due diligence, GMB will provide some preformed revenue calculations of what is expected from port dues and what the expected cost of leasing the terminals from GMB will be. It is desirable that both Terminals are operated by the same operator. Typically, following Organogram showing staffing requirement and command structure can be expected. GMB may however consider keeping security arrangement and staff under their complete control even if not mandated by law.



2.5.3 COMBINED FERRY AND TERMINAL OPERATION MODEL As repeatedly mentioned and emphasized elsewhere in the report, in the first few years of operation the terminals are expected to be used exclusively by one Ferry Operator for origin - destination pair of Dahej - Gogha regardless of number of vessels being deployed. Further the terminal will have effectively major source of revenue except contributed by GMB from the SOPC charges collected by them and from leasing, renting of part of the facilities for food court, curio shop, billboard advertising etc. The collection made by the terminal from leasing renting will be fairly miniscule compare to the cost of maintenance and upkeep and major repair which may be required after a decade or so. It is thus logical on practical ground to have one single agency or operator permitted to handle both the ferry operation and terminal operations, besides having common source of revenue even for technical and logistical purpose. A single agency will make the operation seamless and hassle free and will also reduce the overall personnel requirement as shown by the following diagram. In scenario where terminal and ferry operation are under one agency or operator (even if under two or three different contract agreements)



Recommended to be outsourced by GMB

CEO

GM-Port Operations

GM-Estate/ Admin

Terminals

Customer Service manager/ Port/Vessel operation

HR/Safety Head

Financial & Commercial Manager

-Port Regulation Compliance -Terminal & Berth Maintenance -Berth scheduling -Freight Manager -Terminal Staff -Security -Cleaning Supervision

-Cleaning & Sanitation Staff -Security Staff -Estate Upkeep Staff including Maintenance -Emergency Medical Services

-Safety standard & Policy - Environment -Quality -Employee Relation -HR Management -Training

Clerical staff Technical Manager

Terminal staff

Deputy customer Service

Manager

GM-Vessel operation

-DPA & ISM/STCW & ILO Compliance -Vessel Maintenance -Vessel Routing & scheduling -Freight Manager -Vessel Staff

Technical Manager (DPPA)

Vessel master

-Marketing & Comms -Vessel Hotel & Catering

Vessel Chief Engineer

Vessel Safety Officer

Vessel’s Crew

Deputy F&C

Marketing Manager



2.6 VIABILITY IMPROVEMENT OPTIONS

It is necessary that for the very fundamental viability of the ferry operation, the contract is given on exclusive basis to a single operator for a reasonable length of period. It should be recognized that no serious ferry operator of international repute will come forward to undertake this venture unless he is given an exclusive contract initially for at least 7-10 years – perhaps longer; almost without exceptions the ferry operators would consider that the gestation period for such a new venture the risk is not worth taking unless he has contract for sufficient time period to recover the losses that may occur in early period

With this assumptions and analysis of present market data, gives reasonable confidence that the ferry service on a standalone basis is viable after initial gestation period generating revenues to cater to following

• Cost of ferry operation including vessel leasing, staffing, fuelling and routine and major maintenance

• Cost for cross subsidizing expenses related to operation of terminals and their routine upkeep and maintenance

• Profit to ferry operator

• Contributing a reasonable revenue to GMB beside paying standard SOPC (Schedule of Port Charges)

Above notwithstanding, it is desirable to consider options for enhancing the viability of the ferry operations and in this context following can be considered:

• Initially permit the operator to begin with one vessel if so desired by the operator

• Permit the operator to select categories of the load mixed i.e. Nos of passengers v/s Vehicles/Trucks in each trip

• Permit advertising billboards not only in ferry vessels but also in terminal estates to earn extra revenue

• Permit catering of various additional services including food, beverages, curio shop items etc. as may be permitted by law.

• Consider taking advantage of carbon credit.

• Consider getting a sort of tax holiday / waiver from Government such as waiver of Service Tax and VAT on fuel



2.7 NAVIGATION REQUIREMENTS IN RELATION TO VTMS

Much of the Dahej – Gogha ferry route is in open deep water in the Gulf of Cambay that is also used by other vessels. The ferries will pass across some navigation routes used by vessels including some carrying dangerous cargoes. There are dredged channels that have to be encountered at each end of the crossing. The ferry operator will have to plan appropriate routes to suit the vessels that he proposes and it is expected that he will carry out a risk assessment of the selected route and the chosen operation. This will then be agreed and co-ordinated with GMB’s navigation procedures and tied I with the Gulf of Cambay’s Vessel Traffic Management System (VTMS). The ferries will be manoeuvrable vessels under their own power and operate independently without the use of tugs or any other support vessels. However the operator will have to develop a contingency plan for the use of tugs or other vessels should an emergency arise.

2.8 VESSEL DOWNTIME

A set of “extreme weather” conditions will be defined for each terminal in terms of wave height, wind speed and current speed. Should these be exceeded, any vessel at the Ro-Ro or passenger berth must depart from the berths. The parameters might be different for the Ro-Ro and passenger ferries. It is expected that the parameters will be defined initially at the design stage and then redefined following 6 – 12 months of actual experience of using the facility. A set of “maximum operational” conditions will also be defined for each terminal in terms of wave height, wind speed and current speed. Should these be exceeded the vessels may remain at the berths but cargo and passenger handling must be suspended. The parameters are likely to be different for the RoRo and passenger ferries. Should there be any damage or breakdown of the vessel or any part of the berth or terminal this shall be repaired as soon as possible by the operator. In the case of a vessel breakdown at a berth, the vessel shall be removed and if necessary towed to an anchorage or nearby jetty or shipyard by the operator



3.0 FERRY OPERATORS:

3.1 LEVEL OF SERVICE

The potential ferry operators will be required to provide a suitable number of ferry vessels of the appropriate type and size that will be dedicated to this service. Consideration will have to be given to all relevant factors in arriving at their selection of vessels. There will be two ferry services to consider, each with their own dedicated single berths at Gogha and Dahej. The Ro-Ro service will be operated by vessels carrying trucks, cars and other vehicles as well as passengers. The passenger ferry service will be operated by small dedicated passenger carrying vessels, such as high speed catamarans. All vessels will have to be suitable for operation in dedicated manner on the Gogha – Dahej route, as indicated by the crossing route shown in the figure below. The distance between Gogha and Dahej is around 32km.

Some specific parameters for the ferries and the service will be identified and presented in the tender for the ferry operators. These will include details of dredged depths, dimensions and facilities for the berths and indicative wave current and tidal details. The ferry operators will then propose suitable vessels in their tender bid. Vessels should, wherever possible, be capable of all weather, round the year safe operation and they are to be sufficiently maneuverable so they can berth and unberth without use of tug or any other boat, except in unusual or extreme conditions.

Some of the key requirements as mentioned above are summarized for read reference as under:

• Minimum of 2 Ro-Ro vessels

• 24 X 7 operation with agreed daily schedule

• All weather operation with exception of agreed extreme limits



• All tidal range operation with exception of agreed extreme limits

• Adherence to internationally recognized minimum safety standards

• Minimum number of trips per day

• Maximum age of vessels

• Minimum class of vessel?

• Minimum carrying capacity

• Maximum loading / unloading time at the terminal

• Maximum running time between origin and destination

• Non permissibility of Flag of vessel

• Minimum qualification of command level crew

• Nationality of the crew

3.2 QUALIFICATION CRITERIA

This being a unique project, first of its kind in the subcontinent it is expected to be a path breaking one thus it is most vital to qualify experienced operators of international repute. In a qualitative turn Safety and Reliability will be the governing criteria. It must also be recognized that such operations which has no available commercial precedence in India would necessarily requires ferry operators with requisite financial resources. In nutshell following minimum conditions must be met. .

• Demonstrate ability to meet Level Of Service criteria

• Have successfully operated a similar Ro-Ro ferry service for at least 12 months

• Company financial structure (e.g. Ltd. Co. Listed, unlisted)

• Years in operation

• Requirement of permanent office located in the state of Gujarat



3.3 TENDER ASSESSMENT CRITERIA Following the customary practice and considering that the appointed ferry operator/s will be engaged on a long term basis, it is evident that the tender bid will be assessed in two stages. First would be the assessment stage related to technical provenance. From the shortlisted technically accepted bidders the final selection will be based on commercial consideration. To maintain transparency in technical evaluation it would be necessary to pre assign weight or marks to specific parameters and to let the bidder know about this procedure in advance. Following are some of the important parameters which will need to be considered.

This would include:

• Quality of crew, vessels and operational arrangements

• Capacity of the ferry service

• Number of vessels deployed • Size of vessels deployed • Number of trips per day assured

• Experience

• Standing of Indian partner (if any)

• Assured number of services per day

• Assured number of days of operation per year

• Assured date of commencement of service

After the technical vetting the ferry operator selection will have to be based on the price evaluation which in present case would mean assured revenue maximisation for GMB.

3.4 PERFORMANCE ASSESSMENT CRITERIA

While the regulatory authorities such as D.G. Shipping, MoEF and particularly GMB will evidently maintain continuous monitoring of the services, it would be necessary to agree with bidders in advance the key performance factors that will be systematically and quantitatively measured on a periodic basis.

Key factors among other include: .

• Actual revenue share • On time performance • Safety record • Average number of trips per day • Loading unloading speed at terminals • Complaint regarding damage to vehicles (due to careless lashing) • Complaints regarding discomfort or injury to passengers



3.5 INTERACTIVE ISSUES WITH EPC AND DREDGING CONTRACTOR

The ferry operator at the commencement stage will need to interact with both the EPC contractor for terminal construction and the dredging contractor (including the PMC for dredging contract). This is most vital for smooth, hassle free and timely commissioning of ferry service.

3.5.1 INTERACTION WITH EPC CONTRACTOR

The ferry operator is expected to satisfy himself that all necessary facilities for berthing and de-berthing of his particular ferry vessel have been provided for. It is thus clear that the ferry operator can & will commence the ferry operation only after the terminal construction contractor completes his work. Considering this, GMB should plan the start of ferry operation, only after getting a reasonable assurance about exactly when the EPC contractor will be able to deliver primarily, the berths and secondarily, the terminals in completed condition.

As a part of EPC contract condition the EPC contractor is required to maintain the linkspan for the period of two years. The coordination procedure for this and the protocol thereof will have to be clearly laid out, requiring interaction between ferry operator and EPC contractor in presence of GMB and Beckett Rankine.

3.5.2 INTERACTION WITH DREDGING CONTRACTOR

For the operation of Ro-Ro ferry, dredging, both at the berth and in the channel at Gogha and Dahej end are necessary; both Gogha and Dahej have very high tidal range. It is also emerging that the terminal construction may perhaps get delayed to the beginning of monsoon in 2013. It would therefore be prudent to plan the commencement of the maiden ferry operation (a first of its kind in India and thus having extremely high public profile) after the end of the wet season in 2013 i.e. not before late Sept 2013.

On the other hand the bulk of the capital dredging will have to be completed before commencement of monsoon i.e. before end may 2013. The Gulf of Cambay covering Gogha and Dahej has high degree of siltation and fairly long period of three months (June to mid September) will fill up the dredged area in not very insignificant manner. It is suggested that a provision be kept in the dredging contract to carry out the work in two stages – (i) the major dredging as soon as feasible and (ii) the residual dredging just before the ferry operation commences,

This can give a clean start to the ferry operation, though it can load the dredging contract in a minor manner.

Thus a close coordination and understanding is necessary between the ferry operator and the dredging operator in presence of GMB, Beckett Rankine and PMC service provider for dredging.



4.0 CONTRACTUAL AND REGULATORY ISSUES

It is imperative to recognize that this project being first of its type in India, potential ferry operators will seek clarity on contractual and regulatory issues. Without exception potential ferry operators would seek both a long term contract and also an exclusive one. While initially the bid document may enhance that the concession contract may not be exclusive one and also will be of moderately long period (say 5-7 years), it would be necessary to be flexible about this considerations to ensure participation of reputed and serious bidders.

The potential ferry operator will also seek clarification on a number of regulatory issues. There is a STCW standard viz. International Standards of Training, Certification and watch keeping legislation. This international maritime convention is brought in vogue by The International Labour Organization (ILO). This is ratified by India and we understand this is now being applied since 01st of January 2012. This STCW standard makes allowance for the number of hours a seafarer can work in 24 hours and over a prolonged period. Whether this STCW standard would be applicable for this ferry operation in Gulf of Cambay would depend on how Indian Administrators (essentially DG Shipping) would treat such voyages. The potential ferry operators would seek to understand the regulatory approach the ferry operation in Gulf of Cambay would be subjected to. (A near-coastal voyage or otherwise) It would be important for GMB to be ready to respond to such queries.

The potential ferry operator may also have query on the type of fuel that may be permitted for the vessels. (For instance the limit on sulphur content in the fuel).

A summary of key issues requiring advance consideration by GMB are given hereunder. 1. Contract

• Duration (Term Period) • Exclusivity

2. Terminal operation • Contract arrangements • Staffing arrangements • Facilities for crew (Short duration) • Linkspan maintenance (After two years)

3. Regulatory issues • Custom • Cabotage law o Flag of vessel & o Nationality of Crew

• DG Shipping (Permission) • Coast Guard and Navy Clearance

4. Possibility of Tax break & / or Subsidy in initial period 5. Navigational aid and communication facilities. 6. Frequency of maintenance dredging



5.0 FINANCIAL & BUSINESS MODEL:

At the outset it must be recognized that the financial models are based on some key assumptions which in turn are based on available information, in-house expertise and experience of Beckett Rankine and their associate viz. “Avalon Global Research” and “The Maritime Group (International) Limited”. The Ro-Ro ferry service of the type being considered is the first of its type in the subcontinent and thus some of these assumptions cannot be correlated or tested against historical trends.

Following are the three stakeholders who would have direct Financial Interest in the whole operation:

• Ferry operator

• Terminal Operators

• Gujarat Maritime Board

It should be noted that while there are two terminals and it is possible that legally / contractually & or administratively both the terminals can be / may be operated by separate agencies, for purpose of looking at financial and business models, it is assumed that only one agency will operate both the terminals since the source of revenue for terminal almost entirely will be from the revenue shared by the ferry operator/s. Leasing / renting of some space at the terminals for incidental services such as food court or curio shop owners and from billboard advertising will not be significant. It is also being assumed that in foreseeable future one single ferry operator will use the terminals on exclusive basis.

Further while giving detail consideration to financial models, it is important to note and recognize the following

1. As mentioned above this kind of world class Ro-Ro Ferry Service is first of its type in the subcontinent and thus no historical data is available.,

2. GMB had commissioned a detailed traffic study in 2008, and very recently Avalon has conducted a revalidation study of market data and had also collected fresh set of data based on actual albeit limited field study

3. Finding of this revalidation exercise by Avalon can be summarized as under

• Traffic flow presently using road from the neighboring areas of Gogha and Dahej (origin destination pair) is healthy and was consistent throughout the 24 hour field survey period.



• In all, close to 4000 vehicles including buses moved to and fro between the relevant hinterland

• Rajkot is the biggest pocket for origin and destination traffic. Interestingly it also happens to be the optimum point for maxima revenue.

� Traffic and tariff for various categories of vehicle/Passengers at maxima revenue condition is illustrated in following table :-

Vehicle Category Units per day Price point (Rs per unit)

Hatchback (small car) 389 583 Sedan car 253 583 SUV/MUV/Jeep 225 583 Truck - LCV 283 1,029 Truck - MCV 1,319 1,814 Truck - HCV 307 2,510 Tankers 162 1,814 Trailers 129 1,814

Passenger Category Units per day Price point (Rs per unit)

Adult Passenger ( Cabin Class) 285 495 Adult Passengers (Deck Class) 5,180 128 Child Passenger (Cabin Class) 39 230 Child Passenger (Deck Class) 899 64

� Corresponding lane meterage of space required on ferries running daily between this route in order to cater to this demand is indicated as below:-

Vehicle Category Lane meter of space required

daily

Price point (Rs per unit)

Hatchback (small car) 1,876 583

Sedan car 1,219 583

SUV/MUV/Jeep 1,086 583

Truck - LCV 2,517 1029

Truck - MCV 18,406 1,814

Truck - HCV 5,841 2,510

Tankers 2,257 1,814

Trailers 1,799 1,814

Total 35,000

� Capacity available at Gogha- Dahej route is function of following aspects:-

� Working days in a year

� Number of return trips per day

� Number of ferry vessels

� Design of ferry



� Following illustration shows likely ferry capacity that could be available on Gogha-Dahej route @ 5 meter draft:-

Option 1 Option 2

Passenger carrying capacity 800 800

Lane meterage of space available (in meters) 2,200 2,200

Number of trips (To and fro) 8 10

Passenger carrying capacity per ship per day (in units) 6,400 8,000

Vehicle carrying capacity per ship per day (Lane Meters) 17,600 22,000

� Thus by looking at demand numbers as presented above, there is a compelling case for considering operations with 2 ferry vessels almost at the beginning i.e. as soon as the ferry operator gets reasonable familiar with operation in the sea lane

4. For smooth implementation of ferry tendering it is absolutely essential to understand arrangements possible between various stake holder i.e GMB, Terminal operator and ferry operator along with most appropriate model for awarding a contract

5. Logically financial models with following interrelationship among the stakeholders are possible:-

a) GMB As Terminal Operator With Financial Implications For Ferry Operator

b) GMB As Terminal Operator With Financial Implications For GMB

c) Terminal & Ferry Operation Contracted to separate agencies and analyzing

Financial Implications to Ferry Operator

d) Terminal & Ferry Operation Contracted to separate agencies and analyzing

Financial Implications to GMB

e) Terminal & Ferry Operation Contracted to separate agencies and analyzing

Financial Implications to Terminal Operator

f) Ferry & Terminal Operation combined in single agency contract and analyzing

Financial Implications to Ferry Operator

g) Ferry & Terminal Operation combined in single agency contract and analyzing

Financial Implications to GMB

� Each one of the above has its pros and cons. These are discussed individually below:-



Possibility 1 : Comprising of financial models on p oint a & b

GMB as terminal operator and Ferry operation outsourced to a private operator

Pros :

� More the number of stakeholders added to the project, lesser is the financial attractiveness of the project as every stake holder adds its mark up. With terminal operation being retained by GMB scope of mark up by third party is limited only to ferry operation thus making the project financially more attractive

� This mechanism will give GMB an advantage of closely monitoring traffic within the terminal which could ensure a fair play in future when terminals are used by multiple ferry operators plying on same route or multiple routes.

� Also onus of maintaining the Terminal structure will be on GMB thus reducing concerns of any damage that a third party could cause to the structure due to poor maintenance

Cons:

� Terminal operation is a very dynamic business and requires high involvement. Any mismanagement of traffic within the terminal can lead to serious delays in ferry leaving on schedule thus resulting in compromise on project financials. GMB being a maritime authority has none so ever experience in terminal management and will find it difficult to operate terminal efficiently on day to day basis

Verdict:

� It would make much more sense to award Terminal operation to a third party with experience in terminal management as efficiency and synergy between terminal operation and ferry operation is key for success of Ro-Ro



Possibility 2 : Comprising of financial models on p oint c, d & e

Terminal & Ferry Operation Contracted to separate agencies

Pros:

� This is a very popular model especially in airports where there are multiple carriers using a facility. Advantage of this is that each entity concentrates on its core business rather than getting into unknowns

� In case of Ro- Ro advantage of having this model in place is that it would ensure a fair play in future when terminals are used by multiple ferry operators plying on same route or multiple routes as terminal operation will be controlled by a neutral entity

Cons:

� Financial analysis of this model shows that standalone terminal operation will be a loss making business center as revenue collected by means of leasing out commercial area, advertising and hoardings etc. are going to be insufficient to take care of high maintenance & operating expenses associated with terminal. This is largely due to fact that scale of operation is nowhere close to airports where there are multiple carriers and high foot counts on regular basis. Also paying capacity of passengers shopping at Airport is much more than that of truck drivers who will be using the Ro-Ro facility

� GMB/Ferry operator will have to heavily subsidies terminal operation to start with thus making the project financially unattractive

Verdict:

� In our opinion, GMB should keep this option for future when scale of operation is larger and much of demand has been realized and there is a clear visibility of revenues in terminal operation



Possibility 3 : Comprising of financial models on p oint f & g

Ferry & Terminal Operation combined in single agency contract

Pros:

� Advantage of having this arrangement is that there will be very good synergy in terminal and ferry operation as same entity will be running the show

Cons:

� There could be issues of preferential treatment by terminal operator in future when multiple ferry operators plying on same route or multiple routes

Verdict:

� This seems to be the most appropriate model under t he current situation and has been studied in detail .

� Strong guidelines for terminal operation along with close monitoring by GMB should ensure fairplay in future when terminal is opened to other operators

6. The process will start with shortlisting appropriate bidders on certain predefined parameters with weightages gives to each one of them. There will be a minimum cutoff. Key aspects that will be looked upon include financial strength of firm, experience in terminal and ferry management etc.

7. Various approaches for selecting a ferry operator were evaluated. Of them all, revenue sharing model seemed the most appropriate way of selecting a new operator from shortlisted bidders. Following conditions are proposed under revenue sharing model:

- Operator will have exclusive rights to run ferry on Gogha-Dahej route for 10 years

- Scheduling of ferry will be entirely left on operator



- Pricing will be left on ferry operator

- Number of ferries to be deployed on this route will be ferry operators choice. There will be a precondition under which ferry operator will have to introduce a new ferry in stipulated time as soon as ferry reaches certain predefined capacity utilization level say 70 %

8. For the financial model, two cases pertaining to allocating cost of dredging were studied :-

a. Cost of dredging retained by GMB

b. Cost of dredging passed on to Ferry operator

9. Our analysis shows that net cash available to GMB will be more or less the same in either of the two case as there are defined sources of revenue and defined costs associated with this project. However there could be issues of GMB retaining dredging cost. These are:

a. There could be a situation in future where ferry operation comes to a standstill due to GMB unable to maintain the required draft in the channel. This will result in huge demurrages that ferry operator will impose on the GMB

b. Also if the dredging operations are passed on to ferry operator the overall onus of maintaining synergies in ferry and terminal operation will be entirely on the operator.

c. It would be advisable to pass on the cost to ferry/terminal operator. For our financial analysis we have considered a case where dredging cost is allocate to ferry operator

10. Some of the key assumptions for financial models are as below :-

Sr. No. Particular Details

1 Concession Period 10 Years

2 Number of vessels considered 1 for first year thereafter 2

3 Trips per day 4+4 = 8

4 Lane meterage of space available 2200 lane meters

5 Passenger Carrying Capacity per vessel

800

6 Ferry Operation 345 days per annum

7 USD to Rupee conversion 55

8 Charter rates per vessel per day 9000 USD

9 Bunkering Cost 1150 USD per litre



10 Debt to Equity structure 20:80

11 Interest Rate on Debt 13% per annum

12 Moratorium Period 12 months

13 Debt repayment Period 8 Years

14 Ports Dues Rs 2.4 per GRT per month

15 Berth Hire Rs 1.2 per GRT per day

17 Revenue Sharing with GMB 5%

11. Key financial indicators of the project under integrated Ferry-Terminal operation model are as below :-

Particular Stake Holder 1:-GMB Stake Holder 2:-Ferry Operator IRR -10.5% 67% NPV @ 16% Rs 50 crore Rs 31 crore Payback Period NA 4 Years Cash Accumulated after 10 Years Rs 161 crore Rs 112 crore

Documents

GUJARAT MARITIME BOARD - roro-ferries-in-gulf-of …roro-ferries-in-gulf-of-cambay.com/dls/rrfigoc/GMB_Feasibility... · terms of time saving and distance saving vis-à-vis existing