Bangalore: Essar Shipping Ports and Logistics Ltd has won a bid to develop and operate a Rs479 crore coal handling terminal at the Union government-owned Paradip port in Orissa.

“We have received a letter from Paradip port conveying its intent to award the project to us," said V. Ashok, a director at the Essar Group.

Adding capacity: A view of Paradip port. Essar Shipping was the highest bidder at a public auction for the port’s coal handling terminal.

The contract for the coal-handling project, stretching up to 30 years, will be signed after the Orissa high court disposes of a petition filed by a company that was excluded from the bidding process.

“The case will come up for hearing any day," Raghuramaiah said by phone from Paradip. Essar Shipping had quoted a revenue share price bid of 22% for the terminal with a capacity to handle 10 million tonnes of coal a year.

The firm will share that percentage of the revenue earned from operating the terminal with the port for each of the 30 years.

According to rules for auctioning port projects, the bidder willing to share the highest percentage from its annual operating gross revenues with the government-owned facility will win the rights to develop and operate the cargo-handling berths.

Essar Steel Ltd, another group company, is setting up an integrated 6 million tonne (mt) per annum steel plant just 3km from Paradip port. The first phase of the project is slated for completion by the first quarter of 2010. The coal terminal will help the company import a key raw material used for making steel.

Jindal Steel and Power Ltd, which did not qualify for bidding, challenged its exclusion in the Orissa high court, which stayed the auction process. Paradip port got the stay vacated by the Supreme Court, which also directed the Orissa high court to decide the case expeditiously.

“We are waiting for the court case to be sorted out before signing the contract," Essar Shipping’s Ashok said.

Paradip is one of the 12 ports owned by the central government that together handle some 72% of India’s external trade shipped by sea. They handled 530mt of cargo in the year ended March. The new project is one among several planned by the government to raise cargo handling capacity at the dozen ports to 1,016mt by 2012 from the existing 567mt to overcome capacity bottlenecks.