Adani Ports gets closer to buying Dhamra port3 min read . Updated: 22 Oct 2013, 12:58 AM IST
Dharma port's operator secures environmental clearance for expansion, a key requirement for the deal to go through
Bangalore: Adani Ports and Special Economic Zone Ltd (APSEZ) is set to buy Dhamra port in Odisha after its operator secured environmental and coastal clearances for its second phase of expansion.
APSEZ agreed to buy Dhamra Port Co. Ltd (DPCL), a venture of Larsen and Toubro Ltd and Tata Steel Ltd, early this year for about ₹ 5,000 crore, provided that the current operator gets environmental and coastal zone approvals, according to two people familiar with the development.
“It’s only a matter of time before the deal is announced," said one of them, an independent consultant briefed on the matter. Both declined to be named.
The expert appraisal committee (EAC) has recommended environment and coastal regulation zone clearances to the second phase of expansion at Dhamra port at its meeting held between 19 and 21 September, according to the minutes of the meeting put up on the environment ministry’s website. The EAC recommendation will have to be signed off by the environment minister Jayanthi Natarajan.
A spokesman for APSEZ said the companies involved were negotiating the deal but nothing has been finalized.
Both Tata Steel and Larsen and Toubro could not be reached for comments immediately. DPCL was awarded the rights by the Odisha government in 2004 to develop and operate a port at Dhamra for 30 years. The contract can be extended for two additional periods of 10 years each.
The first phase of the port that has a capacity to load 25 million tonnes (mt) of cargo cost about ₹ 3,200 crore. It started commercial operations in May 2011 from two fully mechanized berths capable of handling coking coal, steam and thermal coal, limestone and iron ore.
Being a port outside the control of the federal government, Dhamra is free to set its own rates. In comparison, rates at the union government-controlled ports are set by the Tariff Authority for Major Ports or TAMP. Located between government-controlled Haldia and Paradip ports, Dhamra is one of the deepest ports on India’s eastern coast, capable of allowing super cape-size vessels, the biggest of the dry bulk ships with a capacity to load as much as 180,000 tonnes of cargo, to dock.
DPCL was awaiting environment and CRZ clearances for the second phase of the port that involves constructing 11 more berths to handle an additional 71.3 mt of cargo and one million standard containers a year. The expansion is estimated to cost about ₹ 10,016 crore.
When fully operational, Dhamra will have 13 berths capable of handling about 100 mt a year of dry bulk, liquid bulk, break-bulk, containerized and other general cargo.
The deal, when officially announced, will help APSEZ ramp up port handling capacity to over 200 mt by 2020.
The firm currently has port-operating assets that can load about 115 mt of cargo and most of these are located on India’s western coast, a big chunk of it in Gujarat, the home-state of its billionaire owner Gautam Adani. APSEZ runs ports at Mundra, Dahej and Hazira—all in Gujarat and are outside the control of the union government. The firm also runs a coal loading terminal at Abbot Point in Queensland, Australia.
The firm is also developing facilities at union government-controlled ports located at Mormugao, Vizag and Kandla.
APSEZ has for long been looking for a port on India’s eastern seaboard to replicate its success story at Mundra, a Chennai-based port consultant said. “Dhamra is a perfect fit for APSEZ," he said on condition of anonymity. Mundra, now India’s biggest private port, handled 82.13 mt of cargo in the year to March.