Vizag Multipurpose Terminal Pvt Ltd, an equal joint venture between J M Baxi Ports & Logistics Ltd and Indian Potash Ltd, has signed a concession agreement with Visakhapatnam Port Authority for mechanising and operating a multi-purpose cargo berth at the State-owned port on a 30-year contract.
K Rama Mohana Rao, Chairman, Visakhapatnam Port Authority, said that the port authority has signed the concession agreement with Vizag Multipurpose Terminal.
A concession agreement sets out the terms and conditions of a port contract and sets the project in motion.
The J M Baxi Ports & Logistics-Indian Potash team placed the highest royalty of Rs55.44 a ton for the project to emerge the successful bidder on a tender issued by Visakhapatnam Port Authority.
Port tenders at major ports (owned by the Centre) are decided on the basis of royalty per ton – the entity willing to share the highest royalty per ton of cargo handled at the berth with the port authority wins the deal for 30 years.
The royalty payable will rise annually in tandem with the increase in wholesale price index (WPI), a measure of costs. The terminal operator will be free to set market rates under the new Major Port Authorities Act and the model concession agreement (MCA).
This will be the fourth contract win for J M Baxi Ports & Logistics at a State-owned major port in recent times. The contract at Visakhapatnam Port involves mechanising the eastern coast port’s East Quay berth 7 (EQ7) for handling bulk cargo including fertilisers with private funds worth Rs201 crores. When mechanised, the EQ7 berth will have a capacity to handle 3.61 million tonnes (mt) of cargo a year.
The project is part of the national monetisation pipeline (NMP) of the government wherein operational infrastructure assets including port terminals will be privatised through the public-private-partnership (PPP) route.