AMARAVATI: The Andhra Pradesh government has chosen lone bidder Adani Ports and SEZ Ltd as the developer of Bhavanapadu port project in Srikakulam district.
The state Cabinet, which met here late last night, accepted the single bid of Adani Ports and SEZ Ltd for developing the greenfield non-major port at Bhavanapadu under public-private partnership mode, an official release said.
"Nitin Gadkari, on behalf of the Ministry of Shipping he heads, had made an open offer to Chief Minister N Chandrababu Naidu in December 2015 to develop Bhavanapadu as a satellite port to Visakhapatnam Port, and extend 26 per cent share to the state government," a top official said.
Adani has offered only 2.3 per cent revenue share for the first 30 years, the official said.
The union minister also followed up the offer by speaking to the chief minister "at least five times" thereafter but the latter opted for a private developer, the official said.
"What the union minister offered (26 per cent) was equity and not revenue share," said Energy, Infrastructure and Investment Principal Secretary Ajay Jain.
Three bidders – Adani, Navayuga and Gangavaram Port – had responded to the tender called by the state government, but Navayuga and Gangavaram subsequently withdrew, leaving Adani alone in the race.
Adani Ports and SEZ had initially offered only 0.5 per cent revenue share to the state but following several rounds of negotiations enhanced it to 2.3 per cent, a senior Energy, Infrastructure and Investment Department official said.
Had the port development been handed over to it, the Ministry of Shipping planned to complete the first phase by mid-2019 and anchor the first ship.
The Ministry of Shipping's plan was to use Bhavanapadu, located about 120-km from Visakhapatnam, as a satellite port for the existing Visakhapatnam Port so as to shift the bulk cargo.
The state government has identified 2,050 acres of land for acquisition for development of the port and the process is yet to be completed.
All this apart, the main question being raised now is about the viability of the port at Bhavanapadu.
"Visakhapatnam Port and Gangavaram Port (private operated) are currently running to only 50 per cent of their capacities. Besides, Gopalpur port in neighbouring Odisha, which is about 150-km from Bhavanapadu, is being revived by Shapoorji and Pallonji Group. Paradip port is also in the vicinity.
"Whether developing Bhavanapadu port makes sense in the current business scenario is the question," a top official observed.
Given this, Adani is said to have indicated to the AP government that it could take five to seven years to develop the Bhavanapadu port, if at all it is financially viable.