P & O Australia Awarded Loi For Vadhwan Port

P&O Australia Ports was yesterday awarded the $1 billion contract to construct a modern all-weather at Vadhwan in north Maharashtra on a build, operate and transfer basis.

Maharashtras letter of intent was handed over to P&Os chief executive Richard Setchell by Prime Minister H D Deve Gowda here yesterday.

The company, a subsidiary of P&O UK, plans to issue equity in the Indian market and rope in financial institutions as partners in the port project.

The first phase of the project, to cost around $300 million, will be completed by the year 2000. The port will have the capacity to handle nearly 18 million tonnes of cargo by then. This is among P&Os top three port development projects in emerging markets.

 

Speaking to the press after receiving the LoI, Setchell said his company was very happy with the way the process worked in India. The state was very cooperative and all the work was completed speedily. It was much better than other countries, where governments invite tenders and then retract it saying they will have to study it all over again, he said.

To finance the project, the company will rely on equity and debt. The Maharashtra government will pick up 11 per cent equity in the company to be floated by P&O Australia. The company will also place shares with institutions. Vadhwan is the first of the seven ports that Maharashtra is developing through private sector participation.

The state government had floated a global tender for the Alewadi project last year. However, P&O, which was lone bidder, had asked for a change of site which was permitted under the terms of the tender. The change was sought as Vadhwan has a higher draft of 15 mts which would allow vessels of 60,000 dead weight tonne (dwt) and more to call. On the other hand, Alewadi would have been able to accommodate vessels of only 35,000 dwt.