Sical Logistics joins race for Barunei Muhan port

The race for selection of a developer for the proposed greenfield port at Barunei Muhan in Kendarapara district of Orissa has hotted up with the Chennai-based Sical Logistics joining other contenders, Arcelor-Mittal, Adhunik Metaliks and SPI Ports Ltd to bid for the project.

As per the proposal submitted to the Orissa government, Sical Logistics intends to invest RS 3600 crore in phases to develop the port, which will have a cargo handling capacity of 46 million tonne per annum (mtpa) when fully commissioned.

While Rs 2500 crore will be invested in the first phase, the second phase will cost another Rs 1100 crore.

The proposed port will be located 9 km north of Paradeep and 4 km north of river Mahanadi. It will handle cargo like iron ore, iron and steel, coking coal, limestone, thermal coal, dry bulk cargo and liquid bulk cargo.

The company made a presentation before the Orissa chief secretary Ajit Kumar Tripathy recently.

The construction for the first phase will start in the mid-2010 and is likely to be completed by 2014.

The first phase construction will include construction of break water, reclamation and dredging among others.

In the first phase, the port will have 3 berths with a cargo handling capacity of 18 million tonne per annum (mtpa). This will increase to 46 mtpa by 2020 with addition of 5 berths.

The project is proposed to be funded with a debt-equity ratio of 3:1 with the equity component estimated to be Rs 900 crore. Sical Logistics plans to rope in a strategic joint venture partner, who will have 50 percent equity in the project.

It stated that availability of 2.5 kms of uninterrupted coast line provided scope for setting up of the port.

It may be noted, the company had submitted its expression of interest (EoI) for setting up of a port at Barunei Muhana in August 2008.

It commissioned a port potential study through KPMG and the technical feasibility report prepared by Ocean Engineering Department of IIT (Chennai) was submitted to the Orissa government on 30 March this year.

The government will take a decision soon about the selection of the developer for the proposed port.

 Since the state government favours a port with higher capacity of about 80 to 100 million tonne, there is chance that none of these four companies will be selected for setting up of a port at Barunei Muhan as the cargo handling capacity projected by all these interested parties is far less than the desired figure.