BackTwo deep sea port projects on east coast set to get nod
Projects with 116 mt capacity to be set up through public-private partnership route, to require `20,500 cr investment
Premium(The Union cabinet is expected to consider the proposal for the two new ports as early as this month.)
Bangalore/New Delhi: In an ambitious push to build key port infrastructure to cater to demand on India’s east coast and strengthen its Look East policy, the Union cabinet will shortly approve the setting up of two new deep sea ports in West Bengal and Andhra Pradesh.
These two port projects will be set up through the public-private partnership route with a capacity to load 116 million tonnes (mt) of cargo a year and will require an investment of around ₹ 20,500 crore.
“The port in West Bengal is to come up at Sagar Island and the feasibility report has been prepared for the facility. The location for the Andhra Pradesh port is yet to be decided," said shipping secretary P.K. Sinha.
“The award of the West Bengal port will be done in this calendar year. These ports will revive growth in the eastern parts of the country," he said.
India, the largest country in South Asia and Asia’s third largest economy, introduced its Look East policy in the early 1990s to forge closer links with the fast-growing South-East Asian economies.
Last year, India said it was joining talks for the creation of the regional comprehensive economic partnership that aims to open up opportunities for increased trade in goods and services, eliminate trade barriers, and gradually liberalize services and provide for greater foreign direct investment in the Asean (Association of Southeast Asian Nations) region and its external trading partners.
The cabinet is expected to consider the proposal for these ports as early as this month. The last such major port project was built at Ennore in Tamil Nadu and started operations in 2001.
The two ports will be implemented through a special purpose vehicle (SPV), with at least 26% equity participation each by the state governments of West Bengal and Andhra Pradesh for the respective ports. The rest will come from the Union government and its agencies. The new ports will also be set up as companies under the Companies Act such as the one at Ennore and will be free to set their own tariffs, unlike the 11 other Union government-controlled ports that are run as trusts.
“The SPV will function as a landlord port, a model for developing ports in which the land and waterfront infrastructure is owned by the government-controlled company, while cargo handling and other essential operations are outsourced to specialist private firms that set up their own superstructure, including buildings and equipment," said another shipping ministry official requesting anonymity.
The first phase of the new port at Sagar Island, with a cargo capacity of 54 mt is estimated to cost ₹ 7,851 crore, according to the feasibility study by consultancy Rites Ltd.
“After getting cabinet approval, the shipping ministry will conduct a feasibility study of the identified locations at Ramayapatnam in Prakasam district and Duggarajupatnam in Nellore district as suggested by the state government ahead of choosing the site," said the shipping ministry official cited above.
India already has 12 major ports and 187 non-major ports, which handle over 90% of the country’s foreign trade. These 12 Union government-run ports—Chennai, Kochi, Ennore, Jawaharlal Nehru, Kolkata (including Haldia), Kandla, Mormugao, Mumbai, New Mangalore, Paradip, Tuticorin and Visakhapatanam—have a capacity to handle 744.33 mt of cargo a year.
“The ministry had earlier picked Ramayapatnam because the other two locations had run into opposition from the defence ministry and Indian Space Research Organisation (Isro), respectively. Isro has since diluted its opposition to the new port site at Duggarajupatnam, putting it back into contention," the shipping ministry official said.
Meanwhile, the Ramayapatnam site has raised viability concerns for the promoters of the nearby Krishnapatnam port as the site falls within an exclusive zone granted to the existing facility, forcing the shipping ministry to review the earlier decision. The government of Andhra Pradesh has agreed not to allow a new port to come up within 30km of either side of the Krishnapatnam port limits, according to an agreement signed with Krishnapatnam Port Co. Ltd in September 2004.
India plans to triple cargo handling capacity at its ports to 3.13 billion tonnes by 2020 from 1.16 billion tonnes in 2011 to meet demand, according to a 10-year plan unveiled by the shipping ministry in 2011.
Currently, 11 of the 12 major ports function as trusts under a law framed about four decades ago known as the Major Port Trusts Act, 1963. Ennore port in Tamil Nadu is the only exception and was formed as a company under the Companies Act, 1956, when it was opened in 2001.
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