Kolkata Port Trust to auction 1,600 acres on 30-yr lease in next 6 months

In the coming six months, Kolkata Port Trust (KoPT) will be putting up at least 1,600 acres of unused land, mainly in Kolkata and Haldia, under the bidding process for a 30-year old lease. It will ensure that the port authorities use up nearly the entire free landholding to generate more revenue.

Currently, KoPT has more than 10,000 acres of land across West Bengal and uses over 43 per cent for its own operations while another 3,400 acres have been put under lease.

 "In the next six months, we will be putting 80-90 plots each having an acreage of 17-20 acres under the hammer for a 30-year lease", the port's chairman Vinit Kumar told Business Standard adding that it effectively uses up the entire landholding of KoPT.

KoPT will be offering two models of payment for the lease. In the first place, a pre-contracted annual payment, which is subject to revision every 5-6 years will be offered. Under this model, the annual rent may shoot up by 2-5 per cent when the revision takes place. A second model, however, offers bidders to make the full payment upfront.

Officials say the first model assures the port a steady annual income while under the second model, a bulk realisation can be made which can strengthen revenues at a single go.

"Thus, we cannot estimate how much money we are going to make out of the lease deals", the official added.

While the port trust earns Rs 2.54 billion as annual rental income and premium on leased land, which increased by Rs 114.3 million in the last fiscal year, its annual revenue expenditure to maintain the entire land and the buildings is to the tune of Rs 485.7 million.

The bidding process for utilising the entire freehold land will take place in tranches. A pre-bid meeting to lease around 30 plots was held last week which was attended by around 60 people.

"We had plot related discussions with the interested bidders and the main discussion was about the nature and usability of the lands to be put under the bidding process. It has evinced a lot of interest", Kumar said.

The prospective bidders are primarily interested in setting up offices, warehouses and putting up institutions like hospitals, medical centres and educational institutions.

Asked if a 30-year lease is a good enough time to evince interest from the bidders, Kumar said, "The world is changing fast today. Keeping an office or running a hospital for 30 years is good enough".

The Centre has mandated that port land can be leased for a maximum period of 30 years.

"The lease term, however, may not be suitable for residential projects which need a much longer, say 99-years lease. But it depends on the ministry to come up with longer lease term for residential projects. For commercial ones, a 30-year term is good enough", an industry official said.

Although KoPT makes an operating profit of 35 per cent for every Rupee earned, owing to huge pension liabilities, it incurred a gross loss of Rs 1.69 billion in the 2016-17 fiscal year as against the gross loss of Rs 2.43 billion in the 2015-16 fiscal year. The total income however, was up by 4.8 per cent at Rs 20.22 billion.

Key points: 

• KoPT to lease at least 1,600 acres in next 6 months

• Land to be put under bidding for lease can be used to build office, warehouse and institutions

• Will offer two modes of payment