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Kakinada port: A difficult transition

Ch. R. S Sarma

The AP Government finds itself in a piquant position as its first attempt at privatisation of a port has run into rough weather. If it concedes the demand of Kakinada Seaports Limited, and switches over to an income-sharing mode, it will face further allegations from the Opposition. And if it insists on a minimum payment, the private operator may express inability to operate the port and call it quits.


Workers repair a tarpaulin at Kakinada port. The AP Government has to undertake integrated and infrastructural development that will percolate down to the Kakinada and the anchorage ports. — pic by A. Roy Chowdhury

KAKINADA, in its transition from a minor to a major port in the past decade or so, is passing through a critical phase and both ports — the old anchorage port and new deep-water port — are finding the going tough.

The latter, built by the State Government at Rs 325 crore and handed over to a private operator, has sent an SOS to the State Government unable to pay the minimum guaranteed amount and seeking a switchover to the income-sharing mode.

The anchorage port, which earlier handled 2-2.5 million tonnes of agricultural cargoes per annum supporting a workforce of around 10,000 (mostly from the fishing community), ha been starved of cargoes for the past two years.

Last fiscal it could not even touch the million tonne mark.

From April to December 2001, the port handled 5.53 lakh tonnes of cargo (3.73 lakh tonnes of imports and the balance exports) against 3.72 lakh tonnes in the corresponding previous period thus recording a slight improvement over the previous year but nowhere near the normal level. It is unlikely that the cargo throughput this year will touch the million-tonne mark. The port could export one lakh tonnes of wheat and a meagre 75,000 tonnes of rice. In fact, rice exports declined as international rice prices were much lower than domestic prices and the Government offered few incentives for exports. Ths is despite the hinterland being rich in rice production and the godowns bursting with stocks. For the first time, in 2001, the Nagarjuna Fertilisers and Chemicals Limited (NFCL) exported urea (3,000 tonnes) to Myanmar through the old port.

The new port, with three berths (one for liquid cargo), could not fully utilise its capacity, even though a container service was introduced at Kakinada for the first time last year and the private operator, Kakinada Seaports Limited, made efforts to woo the tobacco trade in Guntur to route its tobacco exports through the new port. At present, tobacco exports are being routed through Chennai. Early this month, a delegation of tobacco exporters and the Tobacco Board Chairman visited the new port to explore the possibilities of diverting a part of the traffic through Kakinada. However, the new port has still a long way to go to compete with an established port like Chennai.

The State Government finds itself in a piquant position as its first attempt at privatisation (or part-privatisation) of a port has run into rough weather. If it concedes the demand of Kakinada Seaports Limited, and switches over to an income-sharing mode, it has to answer to charges of a "sell-out" as levelled by the Opposition in the Assembly recently. On the other hand, if it insists on the payment of the minimum guaranteed amount, the private operator may express the inability to operate the port and call it quits. Already, some consortium partners have withdrawn.

"There should be a reassessment by the State Government and a long-time master plan should be prepared afresh for the integrated development of both the ports," says Mr D. Surya Rao, the president of the Cocanada Chamber of Commerce. "In fact, even the other ports in the State have not made much headway. Krishnapatnam was handed over to Natco three years ago and no development has taken place. Gangavaram, for which bids have been called, is yet to get off the ground. It is difficult to envisage how Gangavaram can compete with Vizag as it can only be developed as a satellite port. The State Government built the new port here, borrowing Rs 325 crore from the ADB, and handed it over to the private company. It is doubtful whether a private company would have invested the same amount in building the port, without assured bulk cargoes."

He said new cargo would have to be found for the new port and added that the argument that the new port was being affected by not being allowed to handle agricultural cargo (reserved for the old port) was not acceptable.

Mr S. S. Krishnaji, president of the AP Rail Passengers' Association, came down heavily on the Union Government and the State Government for neglecting Kakinada Railway Station and not bringing it on the trunk route. "How can the port be developed without a rail link to carry goods and passengers?

The demand for bringing Kakinada on the main line by connecting it with Pithapuram can no longer be ignored and a double line should be laid immediately. It is absolutely vital for the development of the town and the port.

Of late, efforts are being made to lay only a single line to carry goods, which is not good enough," he said.

The fate of the proposed LNG complex at Kakinada also hinges on the future of the new port and the State Government would have to take a decision soon on what it wants to do with the port here and the decision will also have a bearing on Gangavaram.

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