Vizag Multipurpose Terminal Pvt Ltd, an equal joint venture between JM Baxi Ports & Logistics Ltd and Indian Potash Ltd, has committed funds from Axis Bank to achieve financial close for the mechanization and operation of a 30 year state owned multipurpose cargo berth Port of Visakhapatnam.
The financial completion of the project has been achieved well ahead of the schedule set by the Visakhapatnam Port Authority, JM Baxi Ports & Logistics said on Tuesday, praising the project
Axis Bank’s agility and efficiency and Indian Potash’s leadership support.
The JM Baxi Ports & Logistics-Indian Potash team paid the highest license fee of 55.44 rupees per tonne for the project, emerging as the winning bidder in a Visakhapatnam Ports Authority tender.
Port tenders in major ports (owned by the Centre) are decided on the basis of royalty per tonne – the company willing to share the highest royalty per tonne of cargo handled at the berth with the Port Authority wins the bid for 30 years.
The license fee to be paid increases annually in line with the increase in the wholesale price index (WPI), a measure of costs. According to the new Major Port Authorities Act and the model concession agreement (MCA), the terminal operator is free to set standard market tariffs.
Indian Potash Ltd – more than 70 percent owned by fertilizer cooperatives – is India’s largest fertilizer importer and the second largest fertilizer buyer in the world market. Indian Potash imports fertilizers through all Indian ports and is the only company in India that handles fertilizers in all ports year-round.
This will be the fourth cargo handling job recently developed by JM Baxi Ports & Logistics at a major state port. Mumbai-based JM Baxi Ports & Logistics, India’s third largest logistics company, last year secured container terminal operations at Jawaharlal Nehru Port and VO Chidambaranar Port (formerly Tuticorin Port) and shallow water/coastal berths at JN Port.
The Visakhapatnam Port contract involves the mechanization of the East Coast Port’s East Quay Berth 7 (EQ7) for the handling of dry bulk cargo, including fertilizers, with private funds valued at Rs. 201 Crores. When mechanised, the EQ7 berth will have a capacity to handle 3.61 million tonnes (mt) of cargo per year.
The project is part of the government’s national monetization pipeline (NMP) in which operational infrastructure assets, including port terminals, will be privatized through the public-private partnership (PPP) route.
JM Baxi Ports & Logistics separately operates a 1.5 million TEU (Twenty Foot Equivalent Units) container terminal at the Port of Visakhapatnam.
A TEU is the standard size of a container and a common measure of capacity in the container business.