Two govt depts fight over Subarnarekha port land lease

The state Commerce and Transport department has objected to the Revenue department's stance on payment of incidental charges for leasing out government land to the Subarnarekha port project and said under the Concession Agreement with the port developer, there is no provision to pay the charges.

"There is no provision in the Concession Agreement for payment of incidental charges as stipulated in your letter under reference. If at all the incidental charges are paid, it will be paid by the government in Commerce and Transport department after making necessary budgetary provisions,” said a letter addressed to the Revenue and Disaster Management department from the commerce department.

Chennai-based Creative Port Development Ltd had signed a Memorandum of Understanding (MoU) with the Orissa government in December 2006 to set up a minor port at Subarnarekha mouth and the MoU was later upgraded to concession agreement on January 11, 2008.

As per the agreement, the Commerce and Transport department was to provide 638.7 acre government land in the first phase for Subarnarekha port project out of the total requirement of 1,215 acre. It had requested the Revenue department to expedite the process.

The revenue department in its letter no 40150/RDM had raised the matter of payment of incidental charges for the lease of land on September 21.

As per the provisions of the Orissa Government Land Settlement (OGLS) Rules, 1983, if 500 acre or more is leased to any government department for commercial purposes, then fees for incidental charges like establishment cost, contingencies are levied at the rate of 10 per cent of the market value of the land.

However, the commerce department said, the payment of incidental charges was not necessary as the Concession Agreement was made on the basis of Industrial Policy Resolution 2007, an investment friendly act.

For the Subarnarekha port project, the land will be leased to the company for a period of 34 years which includes construction period of four years in the first phase. The lease period can also be extended by the government twice for a period of 10 years.

The port would have an initial capacity of 10 million tonnes per annum (mtpa) which was to be scaled up to 40 mtpa in 10 years. As per this agreement, the port developer would share revenue with the state government at the rate of five per cent from first to fifth year, eight per cent from sixth to 10th year, 10 per cent from 11th to 15th year and 12 per cent for the remaining 15 years.