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Visakhapatnam Port Trust chalks out Rs 3000-crore plan to expand cargo-holding

The Economic Times:  January, 2015

Hyderabad: The Visakhapatnam Port Trust (VPT) has outlined a Rs 3,000-crore expansion-cum-modernisation plan aimed at enhancing the port's capacity by nearly 50%, a top executive said. The Rs 800 crore or more than port will spend a fourth of the total planned investment, while it will seek private partners to invest the rest by way of public-private partnerships (PPP).

"Private players Vedanta, Essar, SEW and ABG were finalised as the partners who would invest on modernising the cargo-handling," VPT chairman MT Krishna Babu told ET on the sidelines of the East Coast Maritime Business Summit last week.

With a cargo-handling a capacity of 85 million tonne, VPT is the fifth-largest Indian port. The port plans to raise a capacity to 125 million tonne and become the third-largest port in the country over the next three years.

Babu said VPT is unable to utilise more than 70% of its existing capacity, largely owing to issues with cargohandling equipment and evacuation.

It has now firmed-up plans to address both these issues and prepare itself to meet the projected growth in cargohandling amid the Andhra Pradesh government's plan to make the state a gateway for southeast Asian economies. VPT is also taking up the issue with the railways to increase the availability of rakes for speedy evacuation of cargo. Babu said against the requirement of 20 rakes, the port has been provided only 10 rakes, resulting in poor evacuation performance.

The railways is taking up the Delhi-Visakhapatnam dedicated freight corridor, which is being funded by the Asian Development Bank (ADB).

The corridor, around which several power and steel capacities are being built by public and private companies, will also make it necessary for VPT to further upgrade cargo handling infrastructure and capacities, said Babu. VPT, which has six berths which has six berths in the outer harbour and 18 berths in the in ner harbour at Visakhapatnam, has ear marked Rs 300 crore of the investment on dredging works to facilitate large vessels with 100,000 tonne of cargo.

The draft in the inner harbour will reach 12.5 metres and the outer harbour to 18.5 metres. A large part of the Rs 3,000-crore investment would go into modernising the cargo handling infrastructure, he said.

The port authority hopes to significantly improve its top and bottom lines with the help of the proposed capital expenditure on capacity augmentation. VPT expects the revenues to reach Rs 1,500 crore from the current Rs 900 crore, added Krishna Babu. Several large public and private sector manufacturers in the vicinity of VPT may also look at upgrading their manufacturing facilities by utilising the improved cargo-handling capacities at the seaport.

"VPT's decision to increase the cargohandling capacities and ease congestion should help us look at importing more coal through the FOB (free-onboard) model," a senior NTPC executive said here.

"We are importing around 2 million tonne or 20% of our coal requirement through free-on-board(FOB) route and will look at increasing it to over 30% once Visakhapatnam Port Trust improves handling capacities and eases congestion."