Adani Ports and Special Economic Zone Ltd (APSEZ) has walked out of a deal to build a greenfield port at Bhavanapadu in Andhra Pradesh’s Srikakulam district after it bought Krishnapatnam port in January for Rs 13,500 crore.

In January 2018, APSEZ, India’s biggest private port operator, won the deal in an auction to develop a new port at Bhavanapadu, located about 80 nautical miles north east of central government-owned Visakhapatnam Port Trust.

“The deal was cancelled by mutual consent in March,” N P Ramakrishna Reddy, Chief Executive Officer, A P Maritime Board told BusinessLine.

For one year, APSEZ didn’t sign the concession agreement citing issues related to land acquisition etc, he added.

This is a rare instance of APSEZ withdrawing from a port contract after winning the project.

APSEZ had agreed to share 2.3 per cent of the gross revenue with the AP government for the first 30 years, 4.6 per cent for the next 10 years and 9.2 per cent for the balance period of the contract.

In May 2018, APSEZ incorporated a wholly-owned subsidiary Adani Bhavanapadu Port Private Limited Ltd (ABPPL) to build the new port with an investment of Rs 5,000 crore, which marked its entry into Andhra Pradesh.

On January 3 this year, APSEZ signed a deal to buy a 75 per cent stake in Krishnapatnam Port Company Ltd, the entity that runs a private deep-water port at Krishnapatnam in Andhra Pradesh’s Nellore district, for an enterprise value of Rs 13,500 crore.

The equity portion of the Krishnapatnam deal (excluding the debt held by the port operating company of about Rs 7,500 crore) is valued at about Rs 6,000 crore of which APSEZ paid about Rs 4,500 crore for the 75 per cent stake, according to people familiar with the deal.

The Andhra Pradesh government has now sought bids to hire a project management consultancy firm to develop the new port at Bhavanapadu on a landlord model.

Under this model, the state government will fund the basic infrastructure of the port such as dredging, reclamation, breakwater and land acquisition and outsource operations to private firms who will procure heavy duty cranes and other infrastructure required at the berths to handle cargo, Reddy said.

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