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i-maritime News Service

Second dock complex at Haldia port remains a non-starter - 2013-07-04


Kolkata Port Trust’s initiative to expand the capacity of Haldia port remains a non-starter due to cost escalation and concern over availability of cargo.

In May 2011, KoPT invited interested parties to invest in building a second dock complex at Haldia. To be built in two parts, the proposed dock complex was to expand Haldia port’s cargo handling capacity from 50 million tonne (mt) to 73 mt.

After two failed attempts, the port authorities finally received a single bid, for one part of the project, in May. A consortium of Kolkata-based Concast Infratech Ltd and Hyundai Engineering Construction expressed interest in building the 11.7 mt dock system in the northern part, at an estimated investment of Rs 1,800 crore. But, to the discomfort of KoPT, the Concast-Hyundai consortium offered to share a mere 1 per cent of the revenue with the port authorities.

Estimates based on the existing tariff model (issued by Tariff Authority of Major Ports) suggest that 10 million tonne of cargo will fetch a revenue of nearly Rs 185 crore a year. If Concast-Hyundai sticks to its revenue share proposal, KoPT will get less than Rs 2 crore a year.

“There are some viability issues with the project. While development of the port will entail more than double of the estimated costs, issues relating to revenue sharing model must be decided,” Sanjay Surekha, Chairman, Concast, told Business Line.

The embarrassed port authorities are now trying to negotiate the bid. “We will negotiate (the revenue sharing agreement) further. The board of trustees have been apprised of the matter,” KoPT Chairman R. P. S. Kahlon said. However, the Concast-Hyundai consortium is not convinced of KoPT’s projections on cargo availability.

According to sources in Concast, the projections on cargo availability hinges on KoPT’s promise to enhance the draft of the river from the existing 6-7 metres to 9 metres. According to a KoPT source, to offer 9 metre draft, the port authorities should spend approximately of Rs 200 crore a year on dredging.

Considering the recent proposal for withdrawal of dredging subsidy by the Union Government and the frail health of the port, it might not be easy for KoPT to live up to its promises on dredging.

Source: Hindu Business Line