Land allotment for Dhamara Port's expansion not tenable: Odisha govt

Stipulates terms which DPCL needs to comply for being eligible for additional land

Jayajit Dash / Bhubaneswar Nov 07, 2012,
Business Standard
Amid speculation of stake sale by L&T, one of the promoters of Dhamara Port Company Ltd (DPCL), Odisha government has ruled out immediate allotment of land for the port's second phase expansion.

Dhamara Port Company is an equal joint venture between the engineering giant and Tata Steel.

"Allotment of additional land to DPCL for second phase development at this stage does not appear tenable. Further claim of additional land by DPCL shall be considered by the state government on the basis of a norm (thumb rule) being formulated”, G Mathi Vathanan, secretary (commerce & transport) - Odisha stated in a letter to Santosh K Mohapatra, chief executive officer (DPCL) of DPCL.
The state commerce & transport department is expected to finalise guidelines for assessment of land requirement of port projects at a meeting scheduled for November 8.

Meanwhile, the department has stipulated terms which DPCL needs to comply for being eligible for additional land.

First- the port has to achieve capacity utilisation of 70% of Phase-I in accordance with clause 4.4 of the concession agreement. Second - it has to obtain environment clearance from Union ministry of environment & forests (MoEF) for the proposed expansion. Third - DPCL also has to get a no-objection certificate from the National Green Tribunal in the matter of expansion of port beyond the limits of the port.

DPCL's CEO said, “We need 800 acres of land in the second phase purely for port operations. DPCL has already applied for environment clearance.”

Since the beginning of commercial operations, DPCL has handled overall cargo traffic (export and import) of 8.5 million tonne till mid-August. Export traffic accounted for barely 10% since iron ore exports suffered due to state mining department's clampdown on alleged illegal mining activities. The port's current capacity is 25 million tonne per annum.

The speculation surrounding stake sale by L&T had prompted the state government to vet the concession deal signed with DPCL.

According to the concession agreement signed by the state government with developers of non-major ports, the original promoters have to retain atleast 51% stake till the port begins operations. In case of DPCL, the combined equity of the promoters stood at 100% when the port commenced operations in May 2011.

L&T, which holds 50% stake through its fully owned subsidiary-Infrastructure Development Projects Ltd (IDPL), has identified Dhamaraas a non-core asset. The engineering & construction giant aimed to complete the stake sale process in the current fiscal itself.

The promoters have invested Rs 3,500 crore in the first phase. Second phase expansion was yet to take off for want of environment clearance.The port, which was formally inaugurated in December last year and considered to be one of the deepest sea ports in the country with a draught of 17.5 metres, has been taken up after acquisition of land in 74 villages.

The port is capable of handling Capesize vessels up to 180,000 dead weight tonnage (dwt).The Dhamara port master plan provides for 13 berths capable of handling more than 100 million tonne of dry bulk, break bulk and containerised cargo.