JSW Infrastructure Ltd has won the bid to construct and run a new port at Bhavikeri Keni village in Ankola taluka of Karnataka’s Uttara Kannada district.
India’s second biggest commercial port operator quoted a royalty of Rs17.25 per metric ton (mt) of cargo to be handled at the port to win the deal. The royalty will rise by 2 percent annually, as per the Karnataka Minor Port Land Allotment Policy. The “blended royalty” will be irrespective of the cargo handled, including containers.
The tender was to be decided based on royalty per metric ton of cargo handled at the port: the entity quoting the highest royalty per metric ton of cargo to the Karnataka government would win the deal for 30 years.
The new port is estimated to cost Rs4,118.84 crores to build. It will have a capacity to handle 30 million tonnes (mt) of cargo in the first phase which can be expanded to 56.5 mt based on demand.
Referring to the low royalty price bid quoted by JSW Infrastructure, a Karnataka government official said: “The state government is not looking for money to come in from royalty, it wants to capture a large chunk of the cargo moving through the Karnataka coastline”.
“Secondly, we need investments to come into Karnataka, particularly with a lot of welfare-oriented schemes, the GDP needs to grow. A private firm investing over Rs4,000 crores in a new port will have a multiplier effect on the economy, including industrialisation in the region,” the official said.
Besides, the Karnataka government is not giving any land or money to the private operator for building the new port. The intention is to ensure that the private operator brings traffic because there are no private ports in the state unlike other coastal states in the country. The state is currently mainly served by the Centre-owned New Mangalore Port.
JSW Infrastructure was the lone bidder for the project, the first greenfield private port to be developed by Karnataka. JSW Infrastructure’s bid went through a time-consuming approval process, including a change of government in the state in May this year.
Black Brix (Kalinth Advisors Pvt Ltd) acted as the transaction advisor for the project on behalf of Karnataka Maritime Board.
JSW Infrastructure will have to handle a minimum guaranteed cargo (MGC) of 2.5 million tonnes (mt) in the first year of operations, 5 mt in the second year, 7.5 mt in the third year and 10 mt from the fourth year till the end of the concession.
The proposed ports’ hinterland comprises mainly coal and coke cargo which are used by steel, cement, and power plants, per traffic assessment studies. It will also cater to iron ore, limestone, dolomite handlings and export of finished steel products.
Considering other cargo such as bauxite, gypsum, clinker, cement, agri-commodities and finished steel products, the total estimated traffic for the port of Keni is expected to be 27.10 mt in the medium term (7-10 years) and 56.50 mt in the long term (10-20 years), according to the tender document.
Keni also has potential for handling liquid bulk (LPG, LNG, Chemicals, POL, Crude) and containers.
The port will be dredged to handle Capesize vessels that can carry up to 2,00,000 tons and the dredged material will be used to create a back up area of about 500 acres.
