Logistics

High drama in the run up to Adani-Krishnapatnam port deal

P Manoj Mumbai | Updated on July 03, 2020 Published on July 03, 2020

Krishnapatnam Port will now find a new competitor for cargo with the development of a port at Ramayapatnam   -  THE HINDU

Three days before Adani Ports and SEZ Ltd signed a deal on January 3 to buy a 75 per cent stake in Krishnapatnam Port Co Ltd for an enterprise value of ₹13,572 crore, the Andhra Pradesh government thwarted attempts by the original promoters CVR Group to build a new facility in the port’s extended exclusive limits.

The planned new deep-water port at Ramayapatnam in Prakasam district, is now being built by the government itself, for which it has hired AECOM-URS Scott Wilson consortium as the project management consultant. Ramayapatnam will compete with Krishnapatnam for cargo, the reason why the promoters of Krishnapatnam port were keen on developing it on their own.

On December 30 last year, the State government led by YS Jagan Mohan Reddy cancelled two earlier orders issued in 2008 and 2009 and restricted the exclusive limits of Krishnapatnam port as stipulated in the Revised Concession Agreement (RCA) signed by the State government and KPCL.

It restored a clause in the RCA which said “GoAP hereby agrees that no party other than the concessionaire shall have the right to develop a new port, within 30 kms on either side of the port limits, during the concession period under this agreement”.

This put Ramayapatnam outside the exclusive limits of Krishnapatnam port, allowing the State government to proceed with the development of the new port.

BusinessLine has reviewed a copy of the order signed by Rajat Bhargava, principal secretary to the AP government.

The original concession agreement signed by the government and KPCL stipulated that “GoAP can grant a facility for another port, to a private party, within 25 kms on either side of port premises of Krishnapatnam port on the same terms and conditions contained in the concession agreement, or develop by itself only when the Krishnapatnam port is fully utilised and no further expansion of this port is possible. The first right of refusal for such facility should be given to (KPCL) as set out in the MoU (signed by the two parties earlier)”.

The terms of the original concession agreement were changed by a Revised Concession Agreement signed on September 17, 2004, which said that “GoAP hereby agrees that no party other than the concessionaire shall have the right to develop a new port, within 30 kms on either side of the port limits, during the concession period under this agreement”.

To give effect to the RCA, the State government issued orders extending the exclusive rights of KPCL on northern side of the Krishnapatnam Port up to 30 kms south of Vadarevu Port limits, stretching the exclusive limit to about 100 kms.

KPCL, according to the government, sought to “contend its rights with regard to development of a non-major port at Ramayapatnam by themselves by initiation of due diligence and necessary studies”.

KPCL claimed that it had “absolute rights to develop any new port within the notified exclusivity limits”.

The government order issued on December 30 nixed such plans.

“The exclusivity limits granted to KPCL were abnormally extended, giving unbridled rights to KPCL at the expense of national and state interests, restraining and adversely affecting the rights of the government in development of any new port within the extended exclusive limits,” it said.

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Published on July 03, 2020
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