Odisha may relax capacity utilization milestone for Dhamra port

Port's export cargo was badly hit in the wake of state curbs on iron ore exports & also a steep duty of 30% on ore shipped abroad

The Odisha government may exempt Dhamra port from achieving a capacity utilization of at least 70%—a condition that it had imposed on the non-major port for allotment of land needed for its second phase expansion.

The port's export cargo was badly hit in the wake of the state government's curbs on iron ore exports and also a steep duty of 30% levied on ore shipped abroad. Dhamra port has handled barely two million tonne of export cargo in 2012-13 till March 5.

"The Dhamra port authorities have requested us for lifting the condition demanding 70% capacity utilization. We are considering the suggestion. Waiving off this condition makes sense as the port will add new berths in its second phase expansion and this will also translate into more revenue for the state government”, said a senior official source.

Officials of Dhamra Port Company Ltd (DPCL), a 50:50 joint venture between Tata Steel and L&T, were not available for comments on the matter.

DPCL needed 800 acres of land purely for port operations to pursue its second phase expansion.

The state commerce & transport department had stipulated three conditions for leasing out land.

First, the port has to achieve capacity utilisation of 70% of Phase-I in accordance with clause 4.4 of the concession agreement.

Second, it has to obtain environment clearance from Union ministry of environment & forests (MoEF) for the proposed expansion. Third, DPCL has to get a no-objection certificate from the National Green Tribunal for expansion of port limits.

The port which operates two berths with a combined capacity of 25 million tonne per annum (mtpa), has handled a little over 15 million tonne, inclusive of export and import cargo, till March 5, this year since the beginning of its commercial operations in May 2011. The achievement is barely 60% of its available capacity.

The port, however, has breached the 10 million tonne cargo mark in 2012-13, thanks to the rise in import of lime stone and coking coal through the other berth, till March 5, this year. The total cargo traffic is expected to reach 11.2 mtpa by the turn of the fiscal. In 2013-14, the port projects to handle export and import cargo of 18 mtpa.

Through a resolution dated December 5 last year, the state government had imposed a special condition, making it mandatory for mine lessees without end-use plants, to sell at least 50% of their extracted iron ore to state based industries.

Realizing that iron ore traffic is unlikely to be its growth driver given the current clampdowns on exports, Dhamra port has lined up Rs 10,000 crore second phase expansion with an aim to add berths, which can handle diversified cargo.

The expansion will take the port's capacity to 100 million tonne. It will raise the port's berth strength to 13 with a focus on handling of container cargo, liquid cargo, LNG (liquefied natural gas) and crude oil.