The Hindu Business Line : Work on Dhamra port project will begin this year, says Tata Steel MD

"The foreign consultants have completed the engineering designs for the project and we are awaiting final clearance from the environment protection authorities," he told Business Line at Jamshedpur recently.

Mr Muthuraman also expressed hope that the project would be completed within three years. "The CEO for the project has been identified," he said, but he refused to reveal his identity as he was yet to join.

The Rs 1,500-crore plus port project with initial annual capacity of 15 million tonnes (mt) is being implemented by a joint venture between Tata Steel and Larsen & Toubro.

The joint venture company has already been formed. "The debt-equity ratio is 2:1 and the two partners are subscribing to the capital in equal proportions."

A 60-km long rail network linking Dhamra port with the Indian Railways network at Bhadrak located on the East Coast Railway would be part of the project. The rail network is estimated to cost Rs 300 crore.

Mr Muthuraman said that Dhamra will not be a captive port, though the bulk of its projected traffic will be on account of the company's steel plants.

By and large, it would be a coal handling port, handling imported coking coal initially for the Jamshedpur plant, and subsequently also for the Kalinganagar plant, the new unit being set up at Duburi in Orissa. These two plants together are estimated to require 7.5-8 mt annually. "Dhamra will also handle steel exports, about 2-3 mt, and thus about 10-11 mt of traffic annually on our account," he said, but made it clear that the port would also target traffic for others.

According to Mr Muthuraman, Dhamra port would be a key component in the company's supply chain, which also included logistics.

"We are putting in place proper systems at every level of the chain to enhance our competitiveness with the ultimate objective of providing most cost-effective, reliable and high-quality services to our customers."

In 1999-2000, Booz Allen & Hamilton was asked to suggest measures the company should adopt to establish a proper supply chain.

The `hub-and-spoke' system being introduced to rationalise distribution and transportation of finished products was according to the recommendation of the foreign consultant. "We propose to spend Rs 20 crore to have a proper supply chain in place."

Coking coal imports for steel plants through Haldia and Paradip ports might stop once Dhamra had been commissioned.

Right now about 1.8 mt of coking coal are imported by the company, with Haldia accounting for nearly 55 per cent of the import and Paradip the rest.

"Haldia suffers from poor navigability of the Hooghly river while Paradip from several other constraints," he said, adding that Dhamra port, on the other hand, with an average draught of 16-17 m, would be free from such afflictions and therefore be able to handle capesize bulk carriers of the capacity of 160,000 dwt without difficulty.

However, the volume of coking coal imports through Haldia and Paradip would continue to rise till 2008, i.e., till Dhamra becomes operational.

This would happen because of the increased demand for coal to be caused by the capacity expansion of the Jamshedpur plant from 4-5 mt in 2005-06 and further to 7.5 mt in 2007-08.

Inquiries also reveal that coking coal import through Haldia might not stop altogether even after Dhamra port has been commissioned.

Some quantities of coal will still be imported through Haldia, not for the steel plants though, only to meet the requirements of the coke oven unit the Tatas are planning to set up at Haldia at estimated investment of several hundred crores of rupees. The coke to be produced in Haldia coke oven unit will be primarily for the merchant market, not so much for either Jamshedpur or Kalinganagar plants.

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