Land allotment untenable: Odisha

Amid speculation that Larsen and Toubro Ltd (L&T) is planning to sell its stake in Dhamra Port Co Ltd (DPCL), an equal joint venture between the engineering giant and Tata Steel Ltd, the Odisha government has ruled out immediate allotment of land for the port's second phase expansion.

"Allotment of additional land to DPCL for the second phase development at this stage does not appear tenable. Further claim of additional land by DPCL shall be considered by the state government on the basis of a norm (thumb rule) being formulated,” G Mathi Vathanan, secretary (commerce and transport), Odisha, stated in a letter to Santosh K Mohapatra, chief executive officer (CEO) of DPCL.

The state commerce and transport department is expected to finalise the guidelines for assessment of land requirement of port projects at a meeting scheduled for November 8.

Meanwhile, the department has stipulated terms which DPCL needs to comply with for being eligible for additional land.

First, the port has to achieve a capacity utilisation of 70 per cent of phase-I in accordance with clause 4.4 of the concession agreement. Second, it has to obtain environment clearance from the Union ministry of environment and forests (MoEF) for the proposed expansion. Third, DPCL has to get a no-objection certificate from the National Green Tribunal in the matter of expansion beyond the limits of the port.

On being contacted, DPCL authorities said they were in the process of complying with the conditions necessary for obtaining the land.

DPCL's CEO Mohapatra said: “We need 800 acres in the second phase purely for port operations. DPCL has already applied for environment clearance.”

Since the beginning of commercial operations, DPCL has handled overall cargo traffic (export and import) of 8.5 million tonnes (mt) till mid-August. Export traffic accounted for barely 10 per cent since iron ore exports suffered due to the state mining department's clampdown on alleged illegal mining activities. The port's current capacity is 25 mt per annum.

The speculation surrounding the stake sale by L&T had prompted the state government to vet the concession deal signed with DPCL.

According to the concession agreement signed by the state government with developers of non-major ports, original promoters have to retain at least 51 per cent stake till the port begins operations. In the case of DPCL, the combined equity of the promoters stood at 100 per cent when the port began operations in May 2011.

L&T, which holds a 50 per cent stake through its fully-owned subsidiary Infrastructure Development Projects Ltd, has identified Dhamra as a non-core asset. The engineering and construction giant aimed to complete the stake sale process in the current financial year itself.

The promoters have invested Rs 3,500 crore in the first phase. The second phase expansion was yet to take off for want of environment clearance.The port, which was formally inaugurated in December last year and considered to be one of the deepest sea ports in the country with a draught of 17.5 metres, has been taken up after acquisition of land in 74 villages.

The port is capable of handling Capesize vessels up to 180,000 dead weight tonnage (dwt).The Dhamra port master plan provides for 13 berths capable of handling more than 100 million tonnes of dry bulk, break bulk and containerised cargo.