Ahmedabad: A consortium of Cargo Motors Pvt. Ltd and Israel Ports Co. has won the bid to develop Nargol port in Gujarat, which experts say could offer competition to ports in Maharashtra.
To start with, the consortium plans to invest Rs 4,000 crore in developing a container terminal port at Nargol. It is also weighing the option of setting up a car terminal by setting up a roll-on/roll-off (ro-ro) facility in future. This allows wheeled cargo, such as automobiles, to be rolled off or on to vessels without the need for cranes.
“We have been informed by the government that we have won the bid. With Gujarat emerging as the new auto hub, we will consider setting up a ro-ro terminal for handling cars in future depending on the market condition,” said Dhruv Batra, director at Cargo Motors who looks after the ports business.
Cargo Motors will hold 74% equity stake in the joint venture and Israel Ports 26%. Cargo Motors, which is engaged in the logistics and construction businesses, posted sales of Rs 2,400 crore in 2010-11, a major portion of which came from selling cars. Cargo Motors runs car dealerships, besides which the group is involved in the hospitality, logistics, construction and power industries.
A file photo of a shipyard
At least two dozen companies, including a firm from the Adani Group and Hindustan Construction Co. Ltd had initially shown interest in developing the greenfield project but only four, including the Essar Group, the Sterlite-Vedanta combine and Gammon India Ltd, made it to the final round.
“Cargo Motors and Israel Ports won the bid by offering high waterfront charges of 171%. Gammon and the Sterlite-Vedanta team quoted 111% and 10% charges, respectively. Essar was not a part of the final bidding round,” confirmed an official of the Gujarat Maritime Board (GMB), the state regulator for all non-major ports in Gujarat that had invited the bids for the project in 2010. A second GMB official confirmed this.
Nargol is a multi-purpose port that can handle solid, liquid and container cargos. GMB levies a royalty charge on per tonne of cargo to the port developer for using the state’s waterfront. These charges depend on the type cargo handled.
The high premium quoted was “very viable”, said Batra of Cargo Motors. It had been arrived at after due diligence of more than a year and was based on traffic and revenue forecasts.
Batra said the port will handle at least 1.2 million twenty-foot equivalent units of container cargo initially but declined to give details of the project as they are yet to officially hear from the government. Ramesh Singhal, CEO of i-maritime, a maritime consultancy firm, said the project scores on location, given its proximity to north and central Maharashtra and western Madhya Pradesh.
“The all-weather port, located about 150 km from Mumbai, is well suited to divert the traffic like coal from Jawaharlal Nehru Port Trust and Mumbai Port Trust that have been facing congestion problems,” Singhal said.
According to him, the cost involved in developing the port was very high, given that its draft of 11-12 metres was distant from the coastline and a lot of dredging would be required. The developers aim to reclaim 75-150ha of land for developing the port, the first phase of which could be commissioned by 2015-2016.
Nargol was finalized as a greenfield port site after a project at Maroli, about 10 km away, was abandoned in the face of resistance from local fishermen who feared their livelihood could be affected. Israeli firm Zim Integrated Shipping Services had won the Maroli port project but backed out later.
“The state government finalized Nargol and since it faced problems of land acquisition earlier, it has decided to develop the project on reclaimed land,” said a government official who didn’t want to be named.
The Cargo Motors consortium plans to develop a green port using solar and tidal energy. The company is also working on a 25 megawatts solar plant for an investment of Rs 500 crore which it plans to commission in 2013.
This is Israel Ports Co.’s first project outside Israel, where it operates three ports.