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JSW Infra signs concession pact for container terminal at NMPT; to invest ₹300 crore

Thursday, 30 January 2020 | 00:00

The Sajjan Jindal-led JSW Infrastructure Ltd has signed a concession agreement with New Mangalore Port Trust (NMPT) to develop and operate its first container terminal project at a major (Central government-owned) port.

JSW Infra quoted a royalty of ₹951 per twenty-foot equivalent unit (TEU) for a 400,000 TEU capacity terminal to be run from Berth No 14 at NMPT on a 30-year contract with an investment of about ₹300 crore. A concession agreement sets out the terms and conditions of a port contract and puts the project in motion.

DBFOT deal
The deal involves the mechanisation of Berth No 14 for handling containers and other cargo on a design, build, finance, operate and transfer (DBFOT) basis. The container terminal will have a quay length of 350 metre and accommodate vessels of up to 9,000 TEUs. It will have a backup storage area of 15.5 hectares for containers.

“This concession agreement with NMPT is part of our strategic direction to achieve 200 million tonnes per annum (mtpa) cargo handling capacity over the next couple of years,” said Arun Maheshwari, Joint MD and CEO, JSW Infrastructure. “The container terminal at NMPT will enable us to expand our footprint in the container segment and diversify our cargo mix. We expect to commission the terminal by the middle of next year.”

“The modernisation of the container terminal and handling of bigger vessels at NMPT will benefit customers by bringing efficiency and reducing costs. We plan to introduce main-line vessels connecting to key destinations worldwide,” said Devki Nandan, Senior Vice-President, of JSW Infrastructure.

NMPT currently handles about 150,000 TEUs a year.

“With better infrastructure and marketing, and with a better draft, after JSW comes into action, I can bet that the container volumes will touch a minimum 300,000 TEUs in the first year of operations,” said AV Ramana, Chairman, NMPT. “After that, it will be incremental growth and I am sure that container cargo, which is at present 4 per cent of the total cargo of 42 mt at NMPT, will become 15-16 per cent.”

JSW will have to achieve financial closure within six months.

Revised MCA
The project will be the first to utilise the revised model concession agreement (MCA) for PPP projects at major ports, approved by the Union Cabinet in January 2018.

Under the revised MCA, the concessionaire (private operator) is contractually mandated to pay royalty on a “per metric tonne of cargo/per TEU handled” basis to the government-owned port trust, which would be indexed to the variations in the wholesale price index (WPI) annually. The private operator is entitled to a rate hike every year to account for rising prices because the base reference rate set by the Tariff Authority for Major Ports (TAMP) is indexed to the WPI to the extent of 60 per cent.

Besides, the new rule guarantees a raise of as much as 15 per cent on the WPI-indexed reference rate (set upfront at the beginning of the contract by TAMP) during each year of the 30-year contract if the terminal operator complies with certain performance standards.

Ports run by JSW Infrastructure at Jaigarh and Dharamtar (Maharashtra), near Vasco Da Gama (Goa) and Paradip (Orissa) have a combined capacity of over 100 mt. They handled a combined 65 mt of cargo in FY19, of which some 90 per cent were the group’s own cargo.

Third-party cargo
“By 2025, the captive cargo and third-party cargo mix would be 50:50. We are moving from a dependent port to an independent port operator,” Maheshwari had told BusinessLine last October.

JSW Infrastructure aims to build a port capacity for handling 200 mt by 2022 and 300 mt by 2025, to help handle 215 mt of cargo. Of this, more than 100 mt would be group cargo and the balance would be third-party cargo.
Source: The Hindu Business Line

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