Bangalore: The shipping ministry has picked Ramayapatnam in the Prakasam district of Andhra Pradesh to set up a major port as it looks to expand cargo-loading capacity.
This will be the second such Union government-controlled port in Andhra Pradesh after the one at Visakhapatnam. The Union government currently controls 13 ports that handled a combined 560 million tonnes (mt) of cargo in the year to March.
Andhra Pradesh is India’s second biggest maritime state by cargo handled after Gujarat.
Earlier this week, the Andhra Pradesh government recommended Ramayapatnam from a list of two other locations that included Nakkapalli in Visakhapatnam district and Duggarajupatnam in Nellore district for the new port in the state, a shipping ministry spokesman said.
“The ministry has accepted the site recommended by the state government,” he said.
The ministry had earlier picked Sagar Island for setting up a new major port in West Bengal, the second in the eastern state.
The two new major ports, approved by Prime Minister Manmohan Singh in June, will cost about Rs.20,500 crore to build and have 116 mt of annual cargo-handling capacity.
The shipping ministry will now seek in-principle approval from the Union cabinet by mid-October to set up the new major ports.
These will be implemented through a special purpose vehicle, or SPV, with at least 26% equity participation each from the state governments of Andhra Pradesh and West Bengal for the respective ports in their states, and the rest by the Union government, the ministry spokesman said. The Union government may consider giving a higher equity share of up to 30% to the states in the new major ports if the valuation of land and other infrastructure given by them are higher, the spokesman said.
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. The first phase of the new port at Sagar Island, with a cargo capacity of 54 mt, is estimated to cost Rs.7,851 crore, according to a feasibility study conducted by consultancy Rites Ltd, the spokesman said.
A feasibility study for the new port in Ramayapatnam will be conducted soon, he added.
Currently, 12 of the 13 major ports function as trusts under a law framed about four decades ago known as the Major Port Trusts Act, 1963. Ennore Port located in Tamil Nadu is the only exception in this regard.
Ennore port was formed as a company under the Companies Act, 1956, when it was opened in 2001. The 13 ports together account for some 63% of India’s external trade shipped by sea.
“From now onwards, all new major ports will be set up as companies under the Companies Act,” the ministry spokesman said. Ports run as companies will be free to set their own tariffs unlike those that are run as trusts.
India plans to triple cargo handling capacity at its ports to 3.13 billion tonnes by 2020 from the existing 1.16 billion tonnes to meet demand, according to a 10-year plan unveiled by the shipping ministry in 2011.