Krishnapatnam port set to cut tariffs

Move aimed at drawing away major chunk of iron exports from Chennai port

In a strategic move aimed at drawing away a major portion of the iron ore exports, currently being handled by the Chennai port, the Krishnapatnam port in Nellore district is planning to lower its tariffs.

Krishnapatnam Port Company Limited (KPCL), the private developer of the port, in consultation with the state government, has agreed to keep the port tariff lower than that of the Ennore port in Tamil Nadu.

The Ennore port has been recently emerging competitor to the export operations in Hospet-Bellary sector as the iron ore and coal handling at the Chennai port will be stopped from 2005 owing to the adverse effect of pollution caused by iron ore and coal dust on Chennai city.

The state government, which has already tied up with South Central Railways (SCR) to develop the 114-km new railway line between Obulavaripalli and Venkatachalam connecting the Krishnapatnam port to make it more economical in terms of freight and handling in the entire Hospet-Bellary sector, has apparently persuaded the port developer to lower the tariff.

The alternative route to the present movement of iron ore, according to railway officials, will have a reduced distance of 85 km over Chennai port and 100 km reduction over Ennore port.

The freight charges after the completion of the proposed railway line is estimated to be about Rs 337.70 per tonne as compared to Rs 390.50 per tonne at the Chennai harbour and Rs 397.10 at Ennore port.

At present, on the Gudur line, the per tonne railway freight at Krishnapatnam is estimated to be Rs 377.30, still lower than the Tamil Nadu ports, according to SCR sources.

The Rs 494-crore railway line project is expected to take off with equity participation by the port developer, the state government and the Indian Railways holding 26, 13 and 26 per cent respectively.

The project assumes significance in the face of ongoing efforts to increase the port operations in the state, as the railway freight constitutes 60 per cent of the iron ore meant for exports.

Meanwhile, as an immediate response to the developer's decision to keep the tariffs lower than that of the Ennore port, the National Mineral Development Corporation (NMDC) has committed to divert a part of its export operations to Krishnapatnam port, in a high level meeting held by chief minister Y S Rajasekhara Reddy a couple of days ago.

According to sources, NMDC managing director Ramesh Kumar has assured the state government and the private developer on moving the proposal at the company's board meeting.

Out of the 22 million tonnes of iron ore exported from the Hospet-Bellary sector, the Chennai port is expected to handle about 9 million tonnes.

Second in iron ore exports will be Goa port with an estimated handling of 6.5 million tonnes.

Mangalore (1.5 million tonnes), Karwar/ Bellikere (50 lakh tonnes), Ennore (1 million tonnes), Visakhapatnam (2 million tonnes), Kakinada (1 million tonnes) and Krishnapatnam (50 lakh tonnes) are also expected to share the spoils.

About 7.9 million tonnes out of the total production of 11.2 million tonnes of iron ore recorded in this sector between April-August 2004 has been exported during the same period.

India exports around 50 million tonnes of iron ore annually. Most of the exports are directed towards East Asian countries like Japan, China and South Korea, giving advantage to the ports on the east coast.

According to KPCL's projections, the cargo availability under phase 1 of the port development is estimated to be 6-7 million tonnes of iron ore, 1-3 million tonnes of coal and 1 million tonnes of general cargo.

APGenco is expected to import 1.2 million tonnes of coal for its Rayalaseema Thermal Power Project at Muddanur in Kadapa district from the Talcher coalfields in Orissa.