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Green nod delay won't drive away bidders for Paradip port berths - 2012-03-12

For Mr G.J. Rao, taking over as Chairman of Paradip Port Trust was like homecoming. Ten years ago, he had left Paradip after serving the port for nearly 22 years.First he went to New Mangalore port and then to Chennai Port, as Deputy Chairman at both the ports.Prior to his present appointment, he was Chairman of Tuticorin Port Trust. But, even after 10 years, he says there is “not much” of change.

“The number of berths remains unchanged at 14. The single point mooring (SPM) by IndianOil is the only addition. The port now is greener than before but greenery does not add to capacity. The connectivity has improved with the commissioning of National Highway 5A and the Cuttack-Paradip double line,” he says. Mr Rao therefore has got his priority right: capacity addition.He is trying his best to get the early clearances for three berths, one each for handling iron ore and coal and a multipurpose berth.Paradip Port had signed in 2009-10 the concession agreements with selected bidders of the berths but without the environmental clearances.

So, the work therefore is still to start. “I am trying hard and hopeful. The final hurdle, the forest clearance, will be overcome soon.” On whether there are fears of the delay driving away the bidders, Mr Rao says, “Not the Essar Group for its Rs 478-crore coal berth but I'm not so sure about the Nobel Group, which is supposed to construct the iron ore berth estimated to cost Rs 591 crore.” But Paradip Port has not yet received any official letter confirming the bidder's lack of interest in the project. The agreement for the Rs 387-crore multipurpose berth was signed with the Vedanta Group whose interest in the project remains intact, he says. The Essar Group's steady interest in coal berth is understandable.

The port now handles annually about 12 million tonnes (mt) of coal import, which will be transferred to the new berth. So, the new berth will operate full-capacity right from the beginning. If the Nobel Group has developed cold feet about the project, it may be due to present uncertainty on iron ore. But, as Mr Rao feels, the country might even be required to import iron ore in future. “One never knows,” he says. If everything proceeds as planned, the projects in the pipeline should boost the port capacity to 250 mt by 2020, up from the present 76 mt. “Paradip port has a great future,” the Chairman seems convinced. Among the new projects are two more SPMs by IndianOil; one 10-mt-a-year captive jetty, also by IndianOil, for petroleum products; western dock complex to be complete with six bulk cargo berths totalling 75 mt-a-year capacity and offshore breakwater not only to check silting but also to facilitate handling of liquefied petroleum gas to be produced shortly at Paradip refinery, and liquefied natural gas.

Paradip has many proposals from corporate houses targeting existing berths for captive use.For example, the Jindals want the central quay (CQ) 1 berth, Bhusan Steel the CQ2 and the Essar Group the CQ3. Essar Group plans coastal movement of iron ore pellets from the pelletisation plant proposed to be set up outside the port area with 8-km-long conveyor system connecting the berth with the plant. The minimum cargo guarantee is 6 mt a year. Indian Farmers Fertiliser Cooperative Ltd, which has acquired the Oswal's fertiliser plant at Paradip along with a captive jetty, has set its eye on the adjacent multipurpose berth also for captive use with a cargo guarantee of 6 mt a year for both the berths.

MahaGuj, the joint venture between the Governments of Maharashtra and Gujarat to produce electricity, has shown interests in berths eastern quay (EQ) 1, EQ2 and EQ3 to facilitate coastal movement of coal with a guaranteed throughput of 22 mt a year, likely to go up to 34 mt a year. The company proposes to step up substantially the capacity of the berths, acquire on lease 55 hectares and invest an estimated Rs 1,000 crore to augment facility. Even Posco, the Korean steel giant, is mulling to use Paradip port's facilities in preference to a captive port to meet the requirement of its proposed plant in Odisha.

Paradip has also appealed to the Odisha Government for about 2,000 acres of Government land available at Bahuda Muhan in Ganjam district for setting up a satellite port with a capacity of 20 mt. For the Paradip Port, competition from the neighbouring private port is a matter of concern. “In a market-friendly environment, competition is inescapable and we've to accept it and counter it. But I also believe that such an environment should help improve efficiency. Our port's inherent strength will help us face competition squarely,” he says. In 2011-12, Paradip port hopes to handle about 55 mt of traffic against last year's 56 mt despite a shortfall of 9.5 mt in cargo availability this fiscal — iron ore 7 mt and about 2.5 mt of coal shifted to neighbouring private port.

“The iron ore traffic came and went like a Tsunami,” he quips. But the shortfall has been largely made up by increased throughputs of crude, coal, fertiliser raw materials and miscellaneous items. The container throughput is also rising — 6,600 twenty-ft equivalents (TEUs) so far in the current fiscal as compared to 4,800 TEUs in the whole of last year. “The throughput is set to rise further in coming years as Transworld and Seeways Shipping have promised regular vessel calls entailing more import containers. The Container Corporation of India too wants to build a container freight station,” he points out.

Mr Rao's only concern is how to expedite project implementation and therefore wants faster Government decisions. A Government-owned port being subject to myriad scrutiny at various levels, precious time is often lost. This, in turn, benefits competing ports. “I envy private ports for their autonomy in decision-making and flexibility in operation,” he admits.