Vizag Port awaits court order to sign agreement with Essar

Essar Ports Ltd, which emerged as the highest bidder for Rs 845 crore iron ore handling project at Visakhapatnam Port, is yet to get the concession agreement as the port authorities have not signed the dotted line citing court orders, according to sources.

Essar Ports, through its wholly-owned subsidiary Vadinar Oil Terminal Ltd, has emerged as the highest bidder by quoting 31.01% revenue share for mechanisation and operation of three iron ore berths at Visakhapatnam Port on Build-Operate-Transfer (BOT) basis for a concession period of 30 years. These three berths will have a combined capacity of 23MMTPA (million tonnes per annum).

However, based on a petition filed by Visakhapatnam Port and Dock Mazdoor Sangh against the Ministry of Shipping and Visakhapatnam Port Trust, the Andhra Pradesh High Court, while allowing the tendering process to continue, said the process will depend on the further orders by the court.

The project involves upgradation of the existing terminal and also creation of a new facility with a total outlay of nearly Rs 845 crore, including Rs 170 crore upfront fee to the port, a senior official of Vizag Port said.

"Though the tendering process is over and Essar emerged as winner, we could not sign the concession agreement as we want to wait for the outcome of court," the official told PTI.

Essar Ports on May 31 had announced that it won bid for development of three iron ore berths at Visakhapatnam Port.

K Bhavani Shankarudu, who represented the trade body, alleged that as per labour rules the core activity of the port cannot be privatised and the same will harm national security.

"The work of iron ore handling at outer Harbour and inner Harbour of Visakhapatnam Port Trust (2nd Respondent herein) is being done by its employees since nearly 46 years and said work is of perennial nature.

"Once the said contract is awarded to private individuals, the very object and purpose of establishing the Visakhapatnam Port Trust will be defeated as the purpose of creation of Port Trust is to export and import ore and handle other projects," the petitioner alleged.

Essar officials could not be reached for comments.

Since Visakhapatnam Port Trust is a major port wherein vessels and ships from foreign countries will enter into the Indian arena for various loading and unloading activities, the Trust will have the responsibility to see that foreign vessels do not enter into Indian territory or within limits of port area without necessary permissions, the petitioner alleged.

However, private enterprises will not have the powers and they will not be having any responsibility for the safety and security of the harbour and also the activities of the Port Trust, the petitioner added.

On commissioning of this project, EPL's total capacity for iron ore export at the east coast will become 39MMTPA with four highly-mechanised iron ore berths (three in Visakhapatnam port and one in Paradip port), Essar had earlier said.

Vishakhapatnam port handled 12.3 million tonnes of iron ore during FY13 despite slump in iron ore exports.