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Paradip Port to invest 16,000 cr on capacity expansion

LiveMint logoLiveMint 07-06-2014 Swaraj Singh Dhanjal

Mumbai: State-run Paradip Port Trust said it is looking to capture at least one-third of container traffic of India’s largest container port Jawaharlal Nehru Port Trust (JNPT) in Mumbai and will invest `16,000 crore in multiple projects in 10 years to increase the port’s capacity by two-and-a-half times to 270 million tonnes per annum (mtpa).

In fiscal year 2014, Paradip Port handled 68 million tonnes (mt) of traffic, the second highest among all major ports in the country. The port currently has a capacity to handle 108.5 mtpa.

In a presentation to potential investors on Saturday, Paradip Port Trust chairman S.S. Mishra said he is aiming at making the port the mother port on the country’s eastern coast and is looking for various expansion programmes.

Mishra said the port expects to be able to capture at least one-third of container traffic of JNPT in the next 5-10 years. Towards that, he said, the port is planning to develop an inland container depot (ICD). He, however, admitted that only 1-2% of the port’s `1,068 crore revenue in FY2014 came from container traffic.

JNPT handles nearly 60% of container traffic of the country.

Sinha said the port’s expansion plans include various projects such as construction of a “western dock” with six berths and a total capacity of 75 mtpa, mechanization of its existing berths, construction of offshore breakwater with LNG terminal, development of multi-purpose clean cargo berth and iron ore berth.

“Total investment required for these projects is pegged at `16,000 crore. The port trust plans to raise `15,100 through the PPP (public-private-partnership) route and the remaining amount will be invested by the port. We are open to private investment through PPP or captive route,” Mishra said in his presentation. “Container traffic has been witnessing a steady growth of 7%,” he said.

The firm also announced that it has received preliminary interest for two berths at the western dock.

Experts, however, say that the port may face challenges in executing its ambitious plans, citing the exit of several private companies from port projects in the past one year. In March 2013, Sterlite Industries (India) Ltd walked out of an `400 crore multipurpose berth project at Paradip Port citing delays in environmental clearances. Other ports such as Ennore Port Ltd and JNPT had similar problems.

“Private firms have walked out of port projects because of either environmental clearance issues or because they bid too aggressively and later realized that the economics of the deal didn’t make sense,” said a person associated with a domestic infrastructure investment fund house requesting anonymity.

He said that out of the many projects put up before investors by the Paradip Port Trust, the most attractive right now would be the coal and multipurpose berths. “Given the policy issues related to iron ore, investors would prefer to stay away from such projects. Also the port already has quite a lot of headroom in terms of iron ore capacity,” he said.

Investors might also be sceptical of the port’s bullishness on container terminal as the country’s east coast primarily caters to bulk cargo and container traffic is not that substantial to warrant creation of huge capacities right now, he added.

Suresh Kumar, adviser to Paradip Port Trust, however, said that with the new government in place, the trust expects investment sentiment to improve. “Also we have submitted the Environmental Impact Assessment (EIA) report for the western dock to the ministry and we hope that we will get the environmental clearance soon,” he said.

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