The Visakhapatnam port has sought more than Rs 500 crore from the defence ministry as ‘opportunity cost’ to hand over 40 acres of land to Hindustan Shipyard Limited (HSL). HSL’s shipyard is located on 360 acres, which belongs to the Vizag port. HSL has been paying rentals to the port every year. The yard currently has over 3,000 workers with modern shipbuilding equipment.
Vizag Port chairman Ajay Kallam said the port was planning to construct a couple of berths on this land. However, with the Centre deciding to hand over the management from the shipping ministry to the defence ministry recently, the port may not be able to go ahead with its plans.
“If we construct berths on this land we may earn good revenue every year. But, this is unlikely to happen as the defence ministry will not allow us to take up any port activity on that land due to security reasons. Hence, we have asked for over Rs 500 crore as opportunity cost from the ministry,” Kallam told Business Standard.
He said the port would build new berths at the fishing harbour side if the defence ministry does not permit them to build berths near HSL. This would require huge investments and the port proposes to fund this from the amount received from the ministry.
It may be noted that despite modern ship building and ship repair facilities, the public sector unit has been incurring heavy losses for several years and had even become a sick unit. The Centre, therefore, decided to hand over the management to defence ministry.
A special team of officers from the shipping and defence ministries visited the site to take a final decision on the ‘opportunity cost’ issue. “We are hopeful of getting a good amount from the defence ministry as opportunity cost for surrendering the 40 acres to HSL,” he said.
HSL is country’s first and oldest shipyard. It has so far built 137 vessels including passenger vessels, drill ships, cargo vessels, tugs and large barges.