The Hindu Business Line : Krishnapatnam port to be ready by 2005

THE first phase of Krishnapatnam port, being developed at a cost of Rs 900 crore by Krishnapatnam Port Company Ltd (KPCL), will be completed by the middle of 2005. KPCL is developing the port on build, operate, share and transfer (BOST) basis.

Located 27 km from Nellore in Andhra Pradesh, the port is stated to have received a new lease of life from the iron ore producers who have committed to export 16 million tonnes per annum (mtpa) from the place. The other cargo that has been committed by the port include 4 mtpa of coal imports and export of barytes and other mineral and food products. During phase I, the company expects to post a turnover of Rs 400 crore per annum.

According to the KPCL Chairman, Mr Chowdary V. Nannapaneni, the iron ore producers in the Hospet-Bellary region, including the National Mineral Development Corporation (NMDC), have signed memoranda of understanding with KPCL. These MoUs will be converted into firm agreements soon.

Mr Nannapaneni told newspersons that the exporters of iron ore mined in Hospet-Bellary area were looking at an alternate port on the east coast for loading of ore bound for China, Japan and Korea. At present, out of the 12 mt produced in the area, 7 mt was being exported through the Chennai port located 557 km away and the balance through Goa. The Chennai port, however, had announced closure of iron ore exports from 2005 onwards and the area currently being used for iron ore exports would be expanded into higher value container facilities.

Following the Chennai port's announcement, he said, the iron ore producers have evaluated various options on the west and east coast and have selected Krishnapatnam as the port of choice for exports.

In view of this, KPCL had planned to build a modern port suitable for loading super cape size vessels at berth with peak loading capacity of 1.6 lakh tonnes per day. While all basic infrastructures in the port would be built for super cape specifications, initially the depths would be provided for loading cape size vessels only at an average rate of 1 lakh tonnes per day.

As the inland railway haulage was a key element in the logistics of ore export, Mr Nannapaneni said, a new railway line from Hastavaram to Krishnapatnam port had been proposed. RITES conducted the alignment surveys in this regard and plans were afoot for its successful implementation. The new railway line would reduce inland transportation by about 90 km.

For the execution of the railway line project, estimated to cost Rs 354 crore, a special purpose vehicle (SPV) was created. Iron ore exporters of the Hospet-Bellary area, particularly NMDC, would be the major shareholders of the SPV. The project would be completed simultaneously along with port development.

The KPCL Chairman said that in order to firm up the offer made to the exporters, KPCL had undertaken an EPC bidding process for selection of the contractors who could build the port. Out of 51 responses received, five were selected to submit price bids. The project was being funded through equity of Rs 350 crore and debt from international vendors, financial institutions and banks. Ms Nannapaneni & Associates would hold a 26 per cent stake in the equity. The Government of Andhra Pradesh would provide 2,500 acres of land for the port.

The company had recruited IL & FS as financial advisors and lead arrangers for the project. KPCL was also building up a team of senior and experienced leaders who could manage the overall process of development. The first inductee was Mr William Hogg as the CEO designate and Director on board of KPCL. The company had also co-opted Mr Raj Monani and Mr Prakash C. Saraswat as Directors.

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