Kakinada Sea Ports mulls one-time settlement of revenues

Seeks sops on the lines of Krishnapatnam, Machilipatnam ports.

Kakinada Sea Ports Limited (KSPL) plans to go in for a one-time settlement (OTS) of its revenue share with the state government as against the existing yearly installment scheme with regard to the deep water port.

The deep water port was constructed by the Andhra Pradesh government with three berths at a cost of Rs 293 crore. Later, the port was handed over to KSPL, a private consortium, on maintenance, operate and transfer (MOT) basis for a period of 20 years.

According to the present agreement, the KSPL has to pay Rs 525 crore for 20 years on the basis of increasing revenue share every year to the government. So far, the company has paid Rs 125 crore in eight installments. KSPL is now planning to pay the entire amount in lump sum as it feels it would benefit the company.

"The company has to pay Rs 400 crore in remaining 11 installments including the interest and if it goes for OTS, it need not pay the interest on the remaining installments, which comes to around Rs 200 crore," a company official told Business Standard.

Besides, the company has sought change in the KSPL's agreement regarding running of deep water port on the lines of Krishnapatnam and Machilipatnam ports.

The existing clause enables the Krishnapatnam and Machilipatnam ports to draw up their own construction plans whereas the Kakinada Deep Water Ports (KDWP) has to go according to the plan envisaged by the state government about two decades ago.

The two competing ports have sufficient hinterland for further development in future whereas the KDWP has a fixed 25 acres.

"We are, therefore, asking for an additional land of about 300 acres from the land acquired for Nagarjuna Fertilisers and Chemicals Ltd," he said.

It has also urged the government to provide free water and power, besides roads and other facilities on par with Krishnapatnam and Machilipatnam ports.

The company had spent huge amounts on construction of a railway line and is also purchasing water unlike the two ports, said the official, adding it would not only be difficult to grow but also compete with the two ports.

Another problem facing the port is the possible diversion of iron ore cargo from Hospet, Karnataka, to Krishnapatnam port once it is ready. "A major portion of our revenue comes through the iron ore cargo from Hospet and this diversion may impact the revenue," he said.

The deep water port handled 7,96,060 tonne of iron ore cargo in 2004-05, 35,22,422 tonne in 2005-06 and 38,75,795 tonne in the year 2006-07.