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Shipping Ministry asks NHAI to take up Vizag port road project

Amit Mitra

VISAKHAPATNAM, July 5

THE Ministry of Shipping has asked the National Highway Authority of India (NHAI) to take up the proposed Vizag port road project, which would connect the port to the National Highway, on its own.

This comes in the wake of the Vizag port expressing inability to team up with the NHAI for formation of a special purpose vehicle (SPV) to take up the project. The port has made it clear that it could not invest the proposed Rs 50 crore in the Rs 100 cr ore project at least for a year because of the severe financial crunch it is facing.

Authoritative sources told Business Line that the NHAI was considering the Ministry's proposal to take up the port road project on its own. It was originally proposed that Vizag port and the NHAI will share the cost of the project on a 50:50 basis. Viza g port wanted to invest 20 per cent of its share as equity and raise the remaining 30 per cent from the money market.

Later, after the formation of the SPV, Calcutta--based STUP Consultants Ltd was entrusted with the task of preparing the DPR for the project, which also involved laying of a 2.5 km long flyover and a bypass road. As per the original schedule, the SPV wa s to have issued tender documents by end of April this year and award the work by mid--July.

In the meantime, however, the port began to face a `critical financial crunch', in the wake of the implementation of the voluntary retirement scheme (VRS) and various developmental schemes under the Capital Plan and non--Plan schemes.

According to the sources, during the last fiscal, 2,100 employees retired under the new VRS, with the financial implication for the port being an average of Rs 9 lakh for each employee. Thus, the total financial implication for implementation of the VRS works out to Rs 190 crore.

Apart from this, the port has to meet the Capital Plan outlay of Rs 90 crore and non--Plan outlay of Rs 9 crore, which was approved by the Ministry for the current fiscal. As a matter of fact, the port is presently planning to borrow Rs 200 crore to imp lement these schemes.

In the light of this financial crunch, the port is not willing to invest in the port road project at least for a year, notwithstanding its significance in terms of smoother cargo evacuation.

The Ministry is however keen that the port road project is implemented at the earliest, as it would not only ensure better cargo evacuation but also help boost flow of container cargo to the port. The Ministry has given a free hand to the NHAI to take u p the project on its own and get the returns on the investment from the port users by collecting cess on the cargoes.