Dubai Ports exits from Gangavaram project

Gangavaram Port Limited (GPL), which is developing the Rs1,700-crore greenfield Gangavaram port near Visakhapatnam, had roped in Integrax Berhad of Malaysia by offering 20 per cent equity while replacing the Dubai Ports World, which was to take a 13 per cent stake in the project.

The change of the technical partner was effective from February 2006, D V S Raju, chairman of GPL said.

Raju said the Dubai Ports World opted out of the project as GPL promoters could not accept its insistence on allotting higher stake of up to 26 per cent to it in the project.

D V S Raju said the exit of Dubai Ports from the project was not on account of any security reasons. Recently, some quarters expressed their concern over the presence of Dubai Ports near the strategic Indian Navy base following the US government's action on forcing it to exit from its ports.

Dubai Ports is already running container terminal operations at Vizag where the headquarters of the Eastern Naval Command is located.

However, sources in the government pointed out that the clearances to the Gangavaram port project got delayed by at least 2 years owing to the presence of Dubai Ports World as the equity partner.

GPL had signed the concession agreement with the Andhra Pradesh government for development of the port in August 2003 and completed all the formalities including the financial closure last year.

According to the GPL chairman, five of the 29 berths planned in the long-term are scheduled to be completed by December 2007. These five berths will have a combined cargo handling capacity of 25-30 million tonnes a year. GPL expects to handle up to 17-18 million tonnes of cargo under the worst scenario and about 30 million tonnes in the best scenario during the first year of its operations, namely in the year 2008.

GPL has been given a concession period of up to 30 years with a provision to extend it by 20 more years based on mutual consent with the state government.

The Andhra Pradesh government holds 11 per cent equity in the project in exchange of the 1,800 acres of land provided to the port's SPV.

The remaining equity would be held by a US-based fund, Raju told the media while refusing to divulge the name of the firm. Raju held the press conference to clarify issues raised by the Opposition parties who spearheaded the agitation by local fishermen families and forcibly stopped the construction work at the port site for few hours yesterday.