The Hindu Business Line : SPV to execute rail-link for Krishnapatnam port

RITES has been appointed consultants to conduct a feasibility survey for laying new railway line from Cuddapah to Krishnapatnam port without routing through Tirupathi-Renugunta.

Hyderabad , Aug. 26

THE Rs 300-crore railway line to compliment the Krishnapatnam port hinterland and to serve the iron ore shipments will be taken up through a special purpose vehicle - Krishnapatnam Rail Road Corporation - wherein the State Government would pick up 13 per cent stake, with Indian Railways and others as venture partners.

The Infrastructure Leasing & Financial Services Ltd, has been appointed as the project advisors and lead managers for the company and pre-qualification offers have been invited for the construction of the port, including two berths for iron ore and coal, mechanical ore handling equipment including screening plant and conveyer belts, break waters.

Four international firms have been short-listed, according to the Additional Secretary, Ports, Andhra Pradesh Government, Mr N.P. Ramakrishna Reddy.

The Krishnapatnam port, which is being developed as a deep water sea port with a capacity to handle cape and super cape size vessels more than 2,00,000 DWT ships, is gearing up to handle iron ore as an alternative facility to Chennai and Ennore ports and is expected to achieve financial closure by December 2003.

The Government expects EPC bids by the month-end and the port developer is making headway for completion of construction of port as well as railway line in about two to two-and-a-half years in order to capitalise on the fact that Chennai port will stop handling iron ore gradually.

By this time, the Krishnapatnam port will be ready to handle the iron ore cargoes without any difficulty to exporters, official sources told Business Line.

The State had appointed RITES as consultants to conduct a feasibility survey for laying new railway line from Cuddapah to Krishnapatnam port without routing through Tirupathi-Renugunta. Accordingly, RITES have indicated 130 kms length of Railway line to be laid between Hastavaram to Krishnapatanm port. The cost of construction of this line is estimated at about Rs 350 crore.

In yet another survey Sri Koppikar has advised the State Government of the possibility of reducing the cost and development of new railway line with the take off point from Ontimitta instead of Hastavaram, which was suggested by RITES. This is expected to cost about Rs 300 crore.

The port developer and the Government have decided for this alternative approach and to constitute a special purpose vehicle.

The proposed new line between Ontimatta in Cuddapah district and Krishnapatnam, which runs through about 130 kms and effectively reduce the distance between the ore production point that is Hospet-Bellary region and the port by about 120 kms compared to the Ennore port. This would result in savings both in freight costs of around Rs 100 per tonne of iron-ore exported.

A conservative figure of 16 million tonnes per annum from the year 2005, the savings would work out to around $32 million per annum, this is per tonne of iron ore that is exported. Therefore, on a conservative figure of 16 million tonnes of export of iron ore per annum from the year 2005, the savings are expected to be in the range of about $32 million per annum.

This would enable the exporters from the country to become competitive globally, the Government sources observed.

The Krishnapatnam Rail Road Corporation Ltd, being promoted by the port company as a joint venture will have participation from the Indian Railways, exporters and private investors.

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