Tata Steel is banking on a new deep water port being developed on the mouth of Subarnarekha river in Odisha, to power the operations of its flagship Jamshedpur steel project where it operates a 10 million tonne mill.
T V Narendran, global CEO & MD at Tata Steel said, “We have been serving the Jamshedpur steel plant through both Paradip and Dhamra ports. But we believe Subarnarekha would emerge as the best port for our Jamshedpur operations while the ports at Paradip and Dhamra would be best suited to serve our plants at Kalinganagar and Angul respectively. Strategically, all three ports would be important for us”.
Tata Steel has acquired 51 percent stake in Chennai-based Creative Port Development Ltd, a special purpose vehicle formed to develop the Subarnarekha port. The foundation stone for this port will be laid by Odisha’s chief minister Naveen Patnaik on February 13.
Narendran said Tata Steel had talks with the Odisha government officials on land and other infrastructure and was hopeful that work on the port could take off in a few months after all issues were resolved.
The state government has so far handed over 692 acres of land to the port authorities. Odisha chief secretary said, the port project could start activity on the ground once they had access to the approach road spread over 27 acres of land. He felt investments on the Subarnarekha port could touch Rs 5000 crore.
Tata Steel has set a timeline to complete work on the port project in a span of four to five years. The steel company has committed investments of Rs 2000-3000 crore on the port.
Tata Steel, in January 2017, had inked a definitive agreement with Chennai-based Creative Port Development Ltd (CPDPL) to pick up 51 per cent equity in the port project from the original promoters.
The Subarnarekha river mouth is envisaged to be developed as a commercial port on the build, own, operate, share and transfer (BOOST) model. The port development is envisaged through a wholly-owned subsidiary, Subarnarekha Port Pvt Ltd (SPPL).
CPDPL, promoted by two technical entrepreneurs, Ramani Ramaswamy and Ramaswamy Rangarajan, had entered into a concession agreement with the Odisha government in January 2008 to develop the Subarnarekha port in Balasore district as an all-weather deep-draft facility.
According to the concession agreement signed originally, the port would have an initial capacity of 10 million tonnes per annum (mtpa) which was to be scaled up to 40 mtpa in 10 years. As per this agreement, the port developer would share revenue with the state government at the rate of five per cent from first to fifth year, eight per cent from sixth to 10th year, 10 per cent from 11th to 15th year and 12 per cent for the remaining 15 years.
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