Odisha in no hurry to allot land to Dhamra port

Dhamra port needed 800 acres for the phase-II expansion but got a setback when the state govt ruled out immediate allotment of land

The proposed Rs 10,000-crore expansion of Dhamra port, a deep draught commercial port along the eastern coast, could be delayed. The the Odisha government is contemplating whether to hold its decision to allot land for the project, amid speculation of a stake sale by the port’s promoters.

Earlier, there were reports that Larsen and Toubro Ltd (L&T) and Tata Steel Ltd, which own 50 per cent each in Dhamra Port Co Ltd (DPCL) that operates the port off the coast of northern Odisha, were planning to sell their entire stake to the Adani Group. L&T later rejected such reports and said port ownership was “right now under status quo”.

However, the Odisha government appears to have taken a “wait-and-see” approach towards the port’s expansion plan.

“The thumb rule for land assessment for non-major ports is expected to be readied by the end of this month. But then, we are not going to hand over land hurriedly to Dhamra port. There is prevailing uncertainty on change of ownership of the port,” a senior government official said, requesting anonymity.

“It would be prudent to take a call on land-leasing after ownership issues are settled, though a change in ownership at this stage does not violate concession agreement,” the official added.

The thumb rule is being prepared by Rail India Technical and Consultancy Services Ltd, the engineering and consultancy arm of Indian Railways.

Dhamra port needed 800 acres for executing the phase-II expansion project. The expansion got a setback when the state government ruled out immediate allotment of land for the port.

The state commerce and transport department had stipulated three conditions for leasing out land. First, the port has to achieve capacity utilisation of 70 per cent of phase I. Second, it has to obtain environment clearance from the Union ministry of environment and forests for the proposed expansion. Third, DPCL has to get a no-objection certificate from the National Green Tribunal. Of late, the government is understood to have done away with the capacity utilisation norm.

Dhamra port, which began commercial operations in May 2011, has been hit hard by curbs on iron ore exports. Along with a steep export duty of 30 per cent, a resolution of the state government making it mandatory for standalone miners to sell at least 50 per cent of their extracted ore to local industries had impacted port operations.

The port closed 2012-13 with a total cargo traffic of 11.07 million tonnes (mt), 119 per cent spurt over the 5.06 mt seen in 2011-12. The cargo growth was driven by robust imports of limestone and coking coal totalling to 8.72 mt. Exports in 2012-13 stood at 2.35 mt.

The port presently operates two berths with a combined capacity of 25 mt per annum. Realising that iron ore traffic is unlikely to be its growth driver given the current clampdowns on exports, Dhamra port aims to add berths during the second phase of expansion, which can handle diversified cargo. The expansion will take the port’s capacity to 100 mt and raise its berth strength to 13, with a focus on handling of container cargo, liquid cargo, LNG (liquefied natural gas) and crude oil.