Vizag port to lease out land for setting up 3 CFSs

The Visakhapatnam Port has decided to lease out about 56 acres of land for setting up three container freight stations (CFS) in Exim Park on an annual lease basis.

The port is expecting about Rs 30 crore investment and a yearly rental income of about Rs 2 crore. Each CFS will require an investment ranging between Rs 8 crore and Rs 10 crore (excluding land cost) depending on the facilities created by the operators.

The port has identified three blocks for setting up CFSs. It has decided to allot on nomination basis one of the three plots, measuring 23.20 acres, to Balmer Lawrie & Company, a Government of India enterprise under the administrative control of ministry of petroleum.

For the allotment of other two plots (each about 16 acres), the port will invite open tenders very shortly. The port will lease out these plots for 30 years and every five years, it will revise the rental rates depending on the market value of the land.

However, the existing CFS operators in Vizag have expressed unhappiness over the decision.

"Currently, four CFSs have been operating in Vizag. It is a fact that after setting up of the Visakha Container Terminal Limited (VCTL), which operates container berth in Vizag port on BOT basis, the container cargo has increased significantly in this port. But, when the cargo is not sufficient to sustain the existing four CFSs, then where is the scope for another three CFSs in Vizag," G Sambasiva Rao, managing director, Sravan Shipping Container Freight Station, told Business Standard.

Before VCTL launched its operations, Vizag port had handled 15000-20000 container boxes a year. After VCTL, the number of containers in Vizag port has increased to 55,000 boxes. Of these, about 15,000 containers are forced to go without stuffing and de-stuffing activity. On an average, each CFS cannot have a business of more than 700-900 containers a month, Samba Siva Rao said.

"A CFS would need a business of about 2,000 containers a month in Vizag to achieve a break even, but it will take five to six years to reach that point here. Keeping this in mind, the existing CFS operators are opposing the decision," he stated, adding, "More new CFSs will trigger an unhealthy competition among the operators and finally it will lead to the closure of some of them."

But port officials clarify that keeping the future demand in mind, the port is allotting land for setting up three more CFSs.