Operations Paradip Port

Published on May 2nd, 2017


Kakinada Seaports Consortium Wins Paradip Coal Terminal Deal

A consortium led by Kakinada Seaports Ltd has won the rights to develop and operate a coal handling terminal for 30 years at union government-owned Paradip port in Orissa by quoting the highest revenue share price bid in a re-tender for the project that was called by the port authority after scrapping the earlier deal awarded to Essar Ports Ltd citing failure to achieve financial closure.

Essar Ports is contesting the contract termination by Paradip Port Trust through a petition filed in the Orissa High Court.

The Kakinada Seaports Ltd-Bothra Shipping Servives Pvt Ltd-Ripley & Co consortium placed a revenue share price bid of 36.53 per cent to clinch the deal for building a deep-water terminal with a capacity to load 10 million tonnes (mt) of coking coal a year, Paradip Port Trust Deputy Chairman N Vaiyapuri said.

Cargo handling contracts at union government-owned ports are decided on the basis of revenue share – the entity willing to share the most from its annual revenues will get the deal.

“The Kakinada Seaports consortium was issued a letter of award (LoA) for the project after the board of trustees cleared the highest price bid submitted by the group in April,” Vaiyapuri said.

A spokesman for the Kakinada Seaports consortium confirmed the development, adding that it had accepted the LoA issued by the port trust to develop the terminal with an estimated cost of Rs 655.56 crore.

This will be the second port project for Kakinada Seaports, the entity that runs the deep-water port at Kakinada in Andhra Pradesh and one of the first private ports to be developed in India. Bothra Shipping and Ripley are amongst India’s top ship stevedoring service firms.

Essar Ports had signed a concession agreement with Paradip Port Trust on 10 November 2009 to develop the project at a cost of Rs 479.01 crores after placing the highest revenue share price bid of 22 per cent.

However, work on the project was delayed till 2012 because the port authority could not get environment and forest clearances. After these clearances came, the hand-over of land for the project was delayed. As a result, Essar Ports faced difficulty in getting bank funding for the project.

The delay raised the project cost by Rs 175 crores.

“Essar Ports could not fulfil financial closure and so we terminated the contract and re-tendered the project,” Vaiyapuri said.

“We are no longer developing that terminal,” said K K Sinha, the chief executive officer of Essar Ports. “The financial closure was getting difficult because Paradip Port Trust was not able to get environment and forest clearances and could not hand over the land for the project. Ultimately, it could not be developed,” Sinha added.

Essar Ports, a unit of Ruias-promoted Essar Group, continue to show the Paradip coal terminal in its portfolio of projects on its website. Essar Ports, which mostly runs facilities to cater to the group’s captive needs, was de-listed from the stock exchange in November 2015.

ShareFacebooktwitterlinkedin  FollowFacebooktwitterlinkedin

About the Author

Comments are closed.

Back to Top ↑