Varanasi, Haldia multi-modal terminals to be privatised

The Shipping Ministry is making a fresh attempt to privatise the multi-modal cargo terminals at Varanasi, Haldia and Sahibganj on National Waterway 1, altering the deal structure from experience gained in a previous failed round.

The Inland Waterways Authority of India (IWAI) has sought bids to privatise the multi-modal terminals at Varanasi and Haldia on an equip, operate and transfer (EOT) basis while a tender will be floated soon to privatise the Sahibganj terminal on a operate, manage and develop (OMD) model.

In January, the IWAI had scrapped a tender to privatise the Varanasi terminal on the OMD model, wherein the successful bidder would operate and manage the facility and also expand its capacity from 1.26 million tonnes (mt) a year to 3.85 mt a year, within four years from the start of commercial operations.

All the four technically qualified bidders sought an eight-year time frame to invest 334.38 crore in expansion, arguing that four years was too short a time to raise money and invest in a nascent sector.

The EOT model does not involve expansion of the terminals.

Varanasi terminal

The Varanasi terminal, built by IWAI with an investment of 200 crore (excluding land cost) with a capacity to handle 1.26 mt of cargo, is one of the three built by India’s waterways development agency on the 1,400-km-long Varanasi-Haldia stretch on NW 1 with World Bank funding. The other two such terminals are located at Sahibganj and Haldia.

The Varanasi terminal, located in Prime Minister Narendra Modi’s parliamentary constituency, will now be bid out on the EOT model with an initial concession period of 10 years. The concession can be extended by another five years linked to performance and on meeting some conditions, a Shipping Ministry official said.

The tender terms for the Varanasi terminal do not include expanding the facility. “We have kept the concession period short. We will watch the progress of the contract over the next seven years in terms of cargo generation and then take a call on whether to go for expansion or not,” the official said.

Haldia terminal

The Haldia terminal, with a capacity to handle 3.26 mt of cargo, is also been put up for privatisation on the EOT model. The IWAI has constructed the Haldia facility with an investment of 465 crore. “It is a full-fledged terminal with no scope for any expansion,” the official stated.

The Haldia contract will have a concession period of 15 years, which can be extended by an extra five years.

IWAI will use the OMD model for privatising the Sahibganj terminal on a 30-year concession, for which the tender documents are being finalised.

The public, private, partnership appraisal committee (PPPAC) has cleared the privatisation of the Sahibganj terminal which was built with an investment of 286 crore and is operational. The private operator will be mandated to expand the terminal from 3.03 mt to 5.9 mt with an investment of 300 crore.

Explaining the rationale for adopting the OMD model for the Sahibganj facility, the Shipping Ministry official said: “There is a huge interest in the market for this terminal. Private entities have conveyed their willingness to spend 300 crore to expand the facility.”

The bids will be awarded to the entity quoting the highest royalty per ton of cargo handled at each of these terminals.