Essar Ports plans Rs10,600 crore greenfield port in Gujarat

Essar Ports aims to develop a commercial multi-purpose port preferably in Devbhoomi Dwarka district, if Gujarat Maritime Board grants permission


A file photo of the Essar Port in Hazira. Currently, the company operates five ports, all of which are largely for captive purpose.
A file photo of the Essar Port in Hazira. Currently, the company operates five ports, all of which are largely for captive purpose.

Ahmedabad: Essar Ports Ltd, one of the leading port companies in the country, is exploring the option of setting up a greenfield commercial port in Gujarat, according to three officials close to the development.

The company has recently given a project proposal to the state’s maritime regulator Gujarat Maritime Board (GMB) for the same. If it materializes, this would be the company’s first all commercial port in the country. Currently, the company operates five ports, all of which are largely for captive purpose although they handle some amount of third party commercial cargo as well.

According to the investment proposal made to GMB, the company has proposed an investment of Rs10,600 crore for the port project and it plans to employ about 1,000 people, according to two of the three officials quoted.

The company aims to develop a commercial multi-purpose port preferably in Devbhoomi Dwarka district with facilities capable of handling bulk, general cargo, liquid including petroleum and oil lubricants, chemicals and LPG.

A senior GMB official in the know of the development said that the Essar Ports wants to develop a commercial port with a draft of about 18 metres with a cargo handling capacity of 100 million tonnes per annum (MTPA).

Presently, there are only two commercial ports in India that handle a cargo of 100 MTPA or more including the Adani group run Mundra port in Kutch and Kandla Port Trust run government port in Kandla, Kutch. Reliance Industries’ captive port at Sikka near Jamnagar handles close to 125 MMTPA, which is mainly used for its refinery and petrochemical projects at nearby Moti Khavdi.

Apart from cargo, Essar Ports has also proposed to set up a 5 MMTPA liquefied LNG import and re-gasification facilities for the proposed project.

“The state maritime board has already identified locations for greenfield ports like Kacchigadh and Maroli for private development and these would be offered to Essar for their new port. However, since this is not a captive project, as the per the state’s policy for private ports, the regulator might call for bidding,” said the same senior GMB official quoted earlier.

Essar officials when contacted refused to comment on the development. It was not immediately clear if Essar Ports and the state government would sign a memorandum of understanding (MoU) at the upcoming Vibrant Gujarat Global Summit 2017, where a lot of companies are expected to sign such non-binding pacts.

“Essar Ports had volumes but it could not get value for commercial cargo due to limitations of a captive port. With their expertise in handling port business, a multi-purpose greenfield port in south Gujarat would be more viable as GMB has already identified few good sites in the region. Also, it has good connectivity to northern hinterland and many industries have also set up there,” according to Ramesh Singhal, chief executive, i-Maritime Consultancy, which tracks the port and shipping sector.

In October, the Essar group promoters Ruia family signed a deal with Russia’s Rosneft and partner consortium to sell their 98% stake in Essar Oil. The $12.9 billion deal included the 20 MTPA Vadinar refinery and Vadinar Port in Gujarat. It is likely to close by March.

The company had said in a 15 October statement that the deal would help Essar deleverage almost 50% of its Rs88,000 crore debt and substantially reduce interest costs.

Essar Ports current has a cargo handling capacity of 140 MMTPA which it plans to expand to 194 MMTPA over the next few years. Essar Ports has five operational port terminals at Hazira, Vadinar, Paradip, Salaya and Vizag Iron Ore and is estimated to handle approximately 90 MMT of cargo during FY17.

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