Lok Sabha Question No. 4617 (UNSTARRED), answered on 2017-03-30
Subject: New Port at Dugarajapatnam
Ministry: SHIPPING
Asked by: KONAKALLA NARAYANA RAO, YERRAM VENKATA SUBBAREDDY

## GOVERNMENT OF INDIA MINISTRY OF SHIPPING

## UNSTARRED QUESTION NO.4617 TO BE ANSWERED ON 30thMARCH, 2017

## LOK SABHA NEW PORT AT DUGARAJAPATNAM

4617. SHRI KONAKALLANARAYANA RAO: SHRI Y.V. SUBBA REDDY:

Will the Minister of SHIPPINGbe pleased to state:

## पोतप�रवहनमंत्

- (a) whether it is a fact that as perAndhra Pradesh Reorganisation Act thefeasibility study of setting up of a Majorport at Dugarajapatnam in Andhra Pradeshwas to be completed within six months ofnotifying the Act and if so, the detailsthereof;
- (b) the  salient  points  of  therecommendations  made  in  the  Techno-Economic  Feasibility Report  which  hadbeen  submitted  by  M/s  AECOM  alongwith  the  action  taken  by  the Government
- thereon;
- (c) whether  Visakhapatnam  Port  Trusthas  raised  any  objection  with  regard  tosetting  up  of Major Port at Dugarajapatnamand if so, the details thereof along with thereaction of the Government thereto;
- (d) the time frame set for completionof the said project at Dugarajapatnam; and
- (e) whether the Government proposesto set up Major Port at Ramayapatnamand if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF SHIPPING (SHRI PON. RADHAKRISHNAN)

- (a)&(b):  Prior to enactment of the Andhra Pradesh Reorganization Act, the Cabinet Committee on  Economic  Affairs  (CCEA)  had  approved  commissioning  of  a  Techno  Economic Feasibility  Report  (TEFR)    for  establishing  a  new  Major  Port  at  Dugarajapatnam  in Andhra Pradesh by engaging M/s RITES which had submitted its report. The decision to set  up  a  Major  Port  through  the  PPP  process  at  Dugarajapatnam  was  based  on  the commitment given by the erstwhile Government of Andhra Pradesh that the cost of land, Rehabilitation and Resettlement (R&R) and external infrastructure cost would be borne by the State Government of Andhra Pradesh. The State Government of Andhra Pradesh subsequently  expressed  inability  to  fulfil  this  commitment.  To  meet  this  additional financial liability, Government budgetary support towards Viability Gap Funding (VGF) for the project was proposed. NITI Aayog suggested recasting of the Project Model so as to reduce project cost and requirement of VGF by engaging a Consultant. Hence, M/s AECOM was engaged to prepare a revised Techno Economic Feasibility Report, which submitted  its  report  on  10.06.2016.  Salient  features  of  the  TEFR  submitted  by  M/s AECOM are enclosed at Annexure .  NITI  Aayoghas  been  tasked  to  evolve  the    most suitable option in consultation with the Ministry of Shipping, Ministry of Finance and State Government of Andhra Pradesh.

## Annexure

The traffic projections/estimation of traffic for base year  has  been  estimated  as under;

| Commodity                              | 2020   | 2025          | 2025                | 2035          | 2035                |
|----------------------------------------|--------|---------------|---------------------|---------------|---------------------|
| Dry and Break Bulk cargo and Container |        | Base scenario | Optimistic scenario | Base scenario | Optimistic scenario |
| (in MMTPA)                             | 7.8    | 9.5           | 10.7                | 15.7          | 20.0                |

2. For container traffic projections, M/s AECOM has stated that  the projection may further decline  in  case another new  transhipment  hub comes up in the  Southern  tip  of the country.
3. On the basis of above projections, only 3 berths are envisaged by 2035 for handling of cargo of 15.70 MT.
4. Land area requirement for Dugarajapatnam Port has been indicated as under:-
5. Total capital Cost for port development and cost for external Rail, Road connectivity and land acquisition are as under:-

| Year       |   2020 |   2025 |   2035 |
|------------|--------|--------|--------|
| Area(Sq.m) | 338804 | 402786 | 651903 |

(INR in Crores)

| Item                                                       |   2020 | 2035   |   Total |
|------------------------------------------------------------|--------|--------|---------|
| Capital Cost for port development                          |   2472 | 2191   |    4662 |
| External Rail, Road connectivity and Land acquisition cost |   1300 | -      |    1300 |
| Total Cost                                                 |   3772 | 2191   |    5962 |

6. M/s AECOM has suggested three different options for execution of the Project:-
2. (i) By Project Proponents
3. (ii) By allocating Full Fledged Concession to Private Operator
4. (iii) Landlord Model
7. M/s AECOM has finally concluded that with the current traffic and estimated competitive tariff,  the  IRR  for  the  project is very low in all the possible development options and that the project is commercially not viable. However, AECOM has suggested that option 2 -Full Fledged Concession  to  Private  Operator  could  be  explored  with  certain  conditions  so  that  there  is  no financial burden on the SPV and seeking further support from the Central Government through Viability Gap Funding (VGF) of 20% and additional VGF of 20% be mobilized from State Level to generate project IRR of 14%.

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