Naveen Jindal-promoted Jindal Steel and Power Ltd (JSPL) has emerged as the highest bidder for developing the western dock of Paradip Port with a likely investment of ₹3,000 crore, as per a letter issued by the port authorities on May 27.
The letter, accessed by BusinessLine says JSPL has quoted a price of Rs 54 per tonne for 25 million tonnes (MT) of annual cargo handling capacity.
The Paradip Port Authority, the country’s second biggest State-owned port by volume, had set a minimum royalty (reserve royalty) of ₹46 per tonne while inviting price bids.
Normally, tenders are awarded to the bidder quoting the highest royalty per tonne above the reserve royalty.
The “JSPL-JPPL Consortium RFP Bid for Development of Western Dock on a BOT (build, operate, transfer) basis to handle cape-size vessels has been accepted by Paradip Port Authority on the terms and conditions specified in the bid document at a royalty of ₹54 per metric tonne payable to the Port Authority,” the letter said.
The consortium will develop, operate, and maintain the terminal for 30 years.
The conditions that JSPL has to fulfil include that the JSPL-JPPL Consortium (which won the bid) will not involve any other foreign firm/firms as consortium members without clearance from the Centre; the consortium shall at all times during the concession period obtain prior security clearance from security agencies in case there is engagement of any foreign national, among others.
JSPL is expected to invest ₹1,700–1,800 crore in the first phase and work is likely to start in Q2 of FY22 (July-September period), sources said.
Other bidders who were in the race were Essar Port, which quoted ₹51 a tonne, and Navyuga Engineering, which quoted a price of around ₹49 a tonne.
JSPL has been planning to develop a port on the eastern coastal line to secure transportation of steel from its Angul plant in Odisha.
Agreement details
The terminal will reportedly be built in two phases of 12.5 mt capacity each. The construction period for Phase one will be 36 months from the date of the award of the concession.
The construction work for Phase two will begin from the date Phase 1 starts commercial operation and must be completed within 24 months, sources said.
The private operator will have to handle a minimum guaranteed cargo (MGC) of 8.75 tonne and 17.5 tonne a year for Phase 1 and Phase 2 of the project, sources aware said.