Mumbai: The Maharashtra government has cleared a proposal from Rajeev Chandrasekhar’s Hindustan Infrastructure Projects & Engineering Pvt. Ltd to develop and operate an all-weather port at Vijaydurg, as India looks to expand port capacities. The company will spend about Rs1,500 crore on the project, which, when complete, will handle cargo for industries located in Satara, Sangli, Sholapur, Pune and Ahmednagar, all part of the state’s industrial belt.
The Maharashtra Maritime Board has issued a letter of intent to this effect, said an official at the board who did not wish to be identified. The official added that the concession period, or the period the company will be allowed to operate the port, is 50 years. The board oversees development of ports by the state government.
Chandrasekhar made a fortune by selling his stake in mobile service provider BPL Mobile to the Essar Group. Hindustan Infrastructure is promoted by his firm Jupiter Capital. Mint had reported on 3 May that Jupiter was looking to develop and operate the Vijaydurg port. A memorandum of understanding between the government and the company will be signed after Hindustan Infrastructure accepts the terms laid out in the letter of intent. This process is followed in projects such as the Vijaydurg port, where the developer is identified without any competitive bidding process.
Hindustan Infrastructure also plans to bid for the Rs4,360 crore deep water container terminal at Vizhinjam in Kerala, the new fourth container terminal at the Jawaharlal Nehru Port in Navi Mumbai and the development of Tadri port in Karnataka, said a senior executive at Jupiter Capital who asked not to be named.
Since Vijaydurg is owned by the Maharashtra government and developed with private investment, Hindustan Infrastructure can fix tariffs for services provided at the port. Tariffs at Union government-owned ports are fixed by the Tariff Authority for Major Ports (Tamp). Several firms operating container terminals at Indian ports, including Dubai’s DP World and the Port Authority of Singapore, have not been able to get Tamp to hike tariffs. Mint had first reported on 11 July that PSA-SICAL Terminals Ltd, a joint venture of PSA and local firm SICAL Logistics Ltd, which operates the container terminal at Tuticorin port, had decided to reduce its cargo handling capacity in response to Tamp’s refusal to allow it to raise tariffs.
Indian ports currently have the capacity to handle 736 million tonnes (mt) of cargo a year. The shipping ministry says this needs to be raised to 1,500mt a year by 2012 to meet growing demand from exporters and importers. About 95% of India’s trade by volume and 70% by value is ferried by sea.
The 12 ports owned by the Centre—located at Mumbai, Chennai, Kolkata, Mangalore, Kochi, Tuticorin, Visakhapatnam, Mormugao, Kandla, Paradip and Ennore—can handle 508mt a year. Ports owned by states can handle 228mt a year. Most of these ports are in Gujarat and Maharashtra.
The shipping ministry estimates that around Rs90,000 crore would be needed to raise cargo handling capacity to 1,500mt. Much of this money is expected to come from the private sector. According to the ministry, the Centre’s 12 major ports are expected to add 500mt a year of capacity, and ports owned by states, an additional 610mt a year by 2012.