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The Andhra Pradesh government has invited bids for building a greenfield commercial port at Kona village in Thondangi mandal of East Godavari district through the Swiss Challenge method, a first in the ports sector.
Adani Ports and Special Economic Zone Ltd (APSEZ) and Essar Ports Ltd are expected to bid, officials involved in the tendering process said.
Court rulingsPort industry executives see this as a clear indication of States moving away from awarding port projects through the memorandum of understanding (MoU) route (without tenders) in the backdrop of court rulings that natural resources should be auctioned through open competitive bids.
Andhra Pradesh, Odisha, Tamil Nadu and Gujarat have awarded many port projects through the MoU route, drawing flak from agencies, including the Comptroller and Auditor General of India (CAG).
Kakinada port projectIn 2007, Kakinada Special Economic Zone (KSEZ) Ltd, developed by GMR Infrastructure Ltd, was permitted to construct a captive port for handling cargo generated from the SEZ, such as refinery products and LPG.
In 2016, GMR filed a suo motu proposal with the Andhra Pradesh government to convert the captive port into a commercial port under design build, finance, operate and transfer (DBFOT) basis.
The proposal also included the percentage of gross revenue it is willing to share with the government. Andhra Pradesh is seeking counter proposals to select a developer for the ₹2,123-crore project, which will have a concession period of 30 years and can be extended by 20 years.
The bid will be decided on the basis of revenue share offered by prospective bidders. GMR will not be allowed to participate in the bid, but will have the right of first refusal to match the highest bid. If GMR agrees to match the highest revenue share price bid, it will be the selected bidder. If it declines, the highest bidder shall be the successful one.
User fee collectionThe developer will be allowed to levy and collect user fee. It will, however, not be permitted to handle rice and maize at the proposed port.
The port policy notified by the Andhra Pradesh government in November 2015 permits Category 3 Ports (Ports under concessions awarded to private investors for development as captive ports – namely Kakinada SEZ Port, Rawa, Meghavaram and Nakkapalli) for development into a commercial port through the PPP mode.
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