Adani Group among three players in race for AP port project

Adani Group may end its long wait for a port facility in the north coastal region of Andhra Pradesh if it emerges successful in a competitive bid next month. The state government has set June 30, 2016 as deadline for submitting bids for the selection of developer for the green-field Bhavanapadu Port project in Srikakulam district.

In December, 2015 the government had short-listed three firms to bid for the project. Along with Adani, the home-grown port operators -- Gangavarm Port Limited and Navayuga of CVR group which runs the Krishnapatnam Port -- are  the chosen trio, all with a strong back-ground in running the port operations. The spokesperson of  one of the short-listed  companies confirmed that they would be very much in the fray.

The process for selection of developer for Bhavanapadu Port was to be delayed after the government faced a stiff resistance against land acquisition from local people.  

Consequently the government authorities had to scale down the extent of land proposed for acquisition by almost 50% to 2,500 acres from 4,700 acres, which was originally envisaged. The land was also meant for the port-based industrial activity.

"The proposed waterfront  will remain the same. We have reduced the extent of acquisition in other land parcels as we had to avoid the villages from the whole process,"Ajai Jain, secretary, Infrastructure and Investment Department of AP government told Business Standard.  

Despite these hiccups the project has generated considerable interest among the prospective bidders owing to its strategic location. Situated in the AP's northern most coastal district of Srikakulam, the proposed port  can serve the hinterlands of Odisha and Chattishgarh besides catering to the immediate catchment beyond the port city of Visakhapatnam, particularly for bulk cargo like coal. 

To be developed on a Design-Build-Finance-Operate-Transfer (DBOFT)-basis, this green-filed non-major port will be awarded to whoever offers the highest revenue share to the government. The project  is expected to cost around Rs 3,000 crore in the first phase, which comprises of five berths among other infrastructure. It has to be completed in three years from the date of award of the project, according to the government.

Adani Group's desire to invest in  AP  was not new.  About 7-8 years ago the company had approached the state government with a proposal to develop a port as well as a port-based industrial park in an extent of over 10,000 acres in the same region.

Adanis have revived their plans after chief minister N Chandrababu Naidu's government had chosen to develop Bhavanapadu Port under the public private mode soon after it came to power two years ago. The location makes sense for Adani group as the port can serve the hinterlands of the mineral rich Odisha and Chattishgarh where it already have mining and logistic operations.

Earlier there were unconfirmed news reports suggesting that Adani was looking for a buy-out of a majority stake in an existing private port  in AP. Last year the company had acquired Kattupally port from L&T in Tamil Nadu. 

A senior executive of a port company-based in AP earlier told Business Standard that the new port was not going to impact the business of the existing ports on the Andhra seacoast as there will be no overlapping as far as the hinterlands of the existing ports in AP were concerned. 

While Adani has a strong port-based logistic operations located both on the Western and the Eastern seacoasts of the country, the operators of Gangavaram Port Limited and CVR group had emerged as strong players in port operations in this region.

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