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Dubai Ports eyes India expansion despite criticism |
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3/23/2006 8:48:31 AM |
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DUBAI/MUMBAI (Reuters) - Dubai Ports World is pressing ahead with expansion plans in India and is confident of winning over local critics of a deal that has put 40 percent of the country's container traffic in the Gulf Arab company's hands.
A senior Dubai Ports official said Indian criticism of its takeover of British ports operator P&O had been muted by comparison with the political firestorm that forced the company to relinquish six major ports in the United States last month.
The Indian controversy has stemmed mainly from objections that officials in one state were not informed of the $6.8 billion takeover that took the number of Indian terminals under Dubai Ports management to five.
All those terminals are on India's western coast and Ganesh Raj, senior vice president of Dubai Ports World, told Reuters in this week that the company wanted a presence in eastern India.
"We are looking at the best options available to us," Raj, who heads United Arab Emirates-based company's operations in east Africa and west Asia, said in an interview.
He said there was little opportunity for port acquisitions in eastern India, but Dubai Ports would push into rail operations and special economic zones (SEZs) to ride the boom in one of the world's fastest growing major economies.
Raj sees the company's contract to develop the Kulpi economic zone in West Bengal as the next phase of the expansion plan. "We are looking specifically at fast tracking the SEZ project in Kulpi," he said.
KEY OPPORTUNITY
Dubai Ports has long viewed Asia's third largest economy as a key opportunity, given its rapid economic expansion and growing demand for infrastructure investment.
Estimates of the amount of money needed to bring Indian ports, roads and airports to levels comparable with other Asian nations range from $150 billion to $200 billion.
India's 12 major ports are crucial to the infrastructure development drive, handling about 75 percent of all shipping volumes. Container traffic makes up a relatively small proportion of the total but is growing by 15 percent a year.
Raj estimates that terminals managed by Dubai Ports World and P&O now handle about 2.2 million twenty-foot equivalent units (TEUs), about 40 percent of India's total container traffic.
The takeover has prompted some criticism from the media and unions that Dubai Ports was acquiring too large a share of India's ports industry. Raj said those fears were unfounded.
"We cannot leverage (our presence in) one port against another. The nature of the business in India means that it is impossible to do that. Shipping (and ports) companies cannot influence trade patterns in India," he said.
"We are subject to the same regulatory requirements. We cannot charge excessively high prices. In fact we can only cut prices and that is good for the trade."
More serious are objections from officials in Gujarat that they were not informed about Dubai Ports' plans to take control of the P&O-operated terminal at Mundra port.
"We wrote a letter to P&O that unless you have Gujarat government's concurrence you can't change the operation of this terminal," an official at the Gujarat Maritime Services Board said.
"They did not inform us of anything officially (about the takeover)," the official said on condition of anonymity.
Raj was confident that Dubai Ports had met all the regulatory requirements in India and said he wanted to address any concerns raised by local officials.
"I would like to meet the officials and provide the required explanation," he said.
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