Kakinada Gateway Port achieves FC with Rs 2,100 cr loan
Its Rs 3,000-cr Phase 1 development is expected to be completed by the middle of 2025; the first phase capacity is at 20 mn tonnes
image for illustrative purpose
With the completion of the financial closure, we will speed up the construction activities like dredging, rail and road connectivity as well as construction of berths. Our target is to complete the project (first phase) by mid-2025 to make the port fully operational - Ram Reddy Ojili, MD, Kakinada Gateway Port Pvt Ltd, tells Bizz Buzz
Hyderabad: In a significant development, Kakinada Gateway Port Pvt Limited, a Greenfield all-weather private port coming up near Kakinada in Andhra Pradesh on the East Coast of India, recently achieved financial closure (FC) for its Rs. 3,000-crore first phase development by mopping up Rs. 2,100 crore from banks as debt.
With this, the private port will now speed up the construction as it intends to complete the Phase 1 development involving an annual cargo handling capacity of 20 million tonnes by the middle of 2025.
“We completed the financial closure for the first phase of Kakinada Gateway Port through a consortium of financial institutions, led by the lead bank State Bank of India (SBI), which will provide Rs. 2,100 crore as loan. This includes the loan for railway connectivity. The remaining will be the equity component of the project. Before the financial closure itself, we started investing in the port. Up to Rs. 300 crore have been invested by the company for the preliminary works such as the construction of breakwaters and other onsite works,” Ram Reddy Ojili, Managing Director, Kakinada Gateway Port Pvt Limited, told Bizz Buzz.
Reddy further said that with the funds in place now, the construction of the new port would be accelerated.
“With the completion of the financial closure, we will speed up the construction activities like dredging, rail and road connectivity as well as construction of berths. Our target is to complete the project (first phase) by mid-2025 to make the port fully operational,” he explained.
Kakinada SEZ Limited, owned by Auro Infra Group, is developing the Greenfield seaport in 1,650 acres near Uppada-Kothapally in Kakinada district. The seafront of the all-weather, multi-cargo commercial port is around six kilometres and with a proposed draft of 18 metres, the port can handle Cape-size vessels. The port has been designed for an annual cargo handling capacity of 50 million tonnes with the first phase accounting for 20 million tonnes. Once operational, the port will handle various products, including coal, fertilizers, granite and aluminum, agro products
“We will have a dedicated berth for coal. This apart, we will build two multipurpose berths in the first phase,” Reddy said.
On the business for the new port, he said: “As the port is an integrated project with an industrial park (KSEZ) adjoining it, we have been talking to local industries, which are keen to sign up with us based on the port’s operational activities. Ours will one of the major ports on the East Coast. Some of the international shipping lines and business houses are also keen on entering India from the East as ports on the country’s West Coast are busy with increased waiting times. Moreover, all the ports on the East Coast are clocking 10 per cent business growth annually. With governments and global agencies forecasting a $5-trillion dollar economy, we expect a substantial increase in the port traffic in the next 10 years”.
He further said that the new port was coming up at a strategic location in the wake of freight corridors being developed by the central government. The port will cater to the needs of neighbouring States, including Odisha, Chhattisgarh, Telangana and some parts of Maharashtra and Madhya Pradesh, besides Andhra Pradesh, he added.
Reddy pointed out with the China+1 policy of global MNCs, manufacturing sector would slowly pick up momentum in India, the way it did in Vietnam, Taiwan, Thailand and other countries.
“With the rise in domestic consumption, we will also see increased demand for energy, which will, in turn, lead to coal imports,” he said.
On whether the Kakinada Gateway Port would raise any equity investments, he said there was no such plan.
“At this point of time, we are not keen on any investor from a finance angle. We are looking at partners from a business angle or commercial perspective. So, we are also talking to strategic partners with access to shipping lines and logistics business. Such partnerships will help the port take-off at the pace that we are anticipating,” he said.
According to him, the port will generate 4,000 direct and indirect employment opportunities.
At the operational capacity of 20 million tonnes, the port’s revenues are expected to touch Rs. 800 crore. Upon scaling up the capacity to 50 million tonnes, the revenues may swell to Rs. 1,500 crore.
