Kakinada Seaports consortium wins bid to develop coal terminal at Paradip

A consortium led by Kakinada Seaports Ltd has won the rights to develop and operate a coal handling terminal for 30 years at Paradip Port in Orissa by quoting the highest revenue share price bid in a re-tender for the project.

The port authority had called for fresh bids for the project after scrapping the earlier deal awarded to Essar Ports Ltd citing the firm’s failure to achieve financial closure.

The Kakinada Seaports Ltd-Bothra Shipping Services Pvt Ltd-Ripley & Co consortium placed a revenue share price bid of 36.53 per cent to clinch the deal for building a deep-water terminal with a capacity to load 10 million tonnes (mt) of coking coal a year, Paradip Port Trust Deputy Chairman N Vaiyapuri said.

Cargo handling contracts at Central government-owned ports are decided on the basis of revenue share — the entity willing to share the most from its annual revenues will get the deal.

“The Kakinada Seaports consortium was issued a letter of award (LoA) for the project after the board of trustees cleared the highest price bid submitted by the group,” Vaiyapuri said. The concession agreement for the project will be signed in the next few days.

A spokesman for the Kakinada Seaports consortium confirmed the development, adding that it had accepted the LoA issued by the port trust to develop the terminal at an estimated cost of ₹655.56 crore.

This will be the second port project for Kakinada Seaports, the entity that runs the deep-water port at Kakinada in Andhra Pradesh and one of the first private ports to be developed in India. Bothra Shipping and Ripley are amongst India’s top ship stevedoring service firms.

Essar Ports had signed a concession agreement with Paradip Port Trust in November 2009 to develop the project at a cost of ₹479.01 crore after placing the highest revenue share price bid of 22 per cent.

However, work on the project was delayed till 2012 because the port authority could not get environment and forest clearances. After these clearances came, the handing over of land for the project was delayed. As a result, Essar Ports faced difficulty in getting bank funding for the project.

The delay raised the project cost by ₹175 crore.

“Essar Ports could not fulfill financial closure and so we terminated the contract and re-tendered the project,” Vaiyapuri said.

“We are no longer developing that terminal,” said an executive at Essar Ports. “The financial closure was getting difficult because Paradip Port Trust was not able to get environment and forest clearances and could not hand over the land for the project. Ultimately, it could not be developed,” he added.