Bonjour, new guests from small-town India
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
The Board of Approval on special economic zones in the ministry of commerce and industry has approved the sale of equity held by GMR Infrastructure Ltd in Kakinada SEZ Ltd which is implementing a port-based multi-product SEZ in Kakinada.
The Development Commissioner, Visakhapatnam Special Economic Zone (VSEZ), has “accepted the undertaking” given by Kakinada SEZ Ltd “relating to fulfilment of the conditions stipulated by BoA” while clearing the change in share holding pattern, K V Prasanna Kumar, assistant development commissioner, VSEZ, wrote in a communication to Kakinada SEZ.
On September 25, 2020, GMR Infrastructure Limited signed definitive agreements for the sale of equity owned by its wholly owned subsidiary GMR SEZ and Port Holding Limited of its entire 51 per cent stake in Kakinada SEZ Limited (KSEZ) to Aurobindo Realty and Infrastructure Private Limited.
Also read: GMR Delhi, Hyderabad airports receive ACI World’s ‘Voice of Customer Recognition’
As part of the proposed transfer of stake of KSEZ, the 100 per cent equity stake of Kakinada Gateway Port Limited held by KSEZ would also be transferred to Aurobindo Realty, GMR said on September 25.
The deal was finalised at ₹2,610 crore including equity and sub-debt in KSEZ.
While the stake sale in Kakinada SEZ had to be signed off by the BoA, the accompanying transaction on Kakinada Gateway Port needed approval from the A P government as the port project was still in the lock-in period for sale of promoter’s stake stipulated in the concession agreement.
With the BoA approving the shareholding change in Kakinada SEZ, the state government is expected to clear the port transaction soon as the SEZ and the port are inter-linked, an official said.
In November 2018, Kakinada Gateway Port signed a concession agreement with the Andhra Pradesh government for development of a greenfield commercial port spread over 1,811 acres on design, build, finance, operate and transfer (DBFOT) basis at Kona village in East Godavari district with an investment of ₹2,123 crore.
Also read: GMR expresses interest to expand perishable cargo facility in Hyderabad
Kakinada Gateway Port is contractually mandated to share 2.7 per cent of gross revenue with the State government during first 30 years, 5.4 per cent from 31 to 40 years and 10.8 per cent during 41 to 50th year of operations.
This was the first commercial port project in India to be awarded under the Swiss Challenge method.
In 2007, KSEZ was permitted to construct a captive port for handling cargo generated from the SEZ such as refinery products and LPG. In 2016, GMR filed a suo-moto proposal with the State government to convert the captive port into a commercial, multi-user port on DBFOT basis. The proposal also included the percentage of gross revenue it was willing to share with the government.
The State government then sought competing counter proposals to select a developer for the project in which GMR was given the right of first refusal to match the highest bid.