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Jindal Steel & Power Offers ₹54 Per Metric Tonne In Royalty For Paradip Port Deal

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MUMBAI : Jindal Steel & Power Ltd (JSPL), a Mumbai-listed company, won a royalty price offer of 54 per metric tonne (mt) for a 25-million-tonne (mt) capacity, deep draught, dry bulk cargo terminal at the port’s Western Dock for a total investment of 2,392.13 crore.

While inviting price bids, the Paradip Port Authority, India’s second largest State-owned port by volume handled, established a minimum royalty (reserve royalty) of 46 per metric tonne. The bidder who quotes the highest royalty per metric tonne above the reserve royalty will be awarded the tender. The successful bidder will be able to set market-driven rates at his or her discretion.

The royalty paid to the port authorities on each metric tonne of cargo handled at the terminal will increase year after year depending on the Wholesale Price Index (WPI).

Essar Ports quoted ₹51 per metric tonne as royalty while Navayuga Engineering Company placed a price bid of ₹49.2 per metric tonne, an officials said.

“The highest royalty per metric tonne quoted by JSPL is a reasonably good price,” said a port industry official. “The port authority will not make any investment in the project but will offer land to the private operator. Besides, it will collect port dues and pilotage charges from ships calling at the terminal,” he said.

The private operator will levy berth hire and cargo handling charges from users of the facility.

The terminal will be built in two phases of 12.5 mt capacity each. The construction period for Phase 1 will be 36 months from the date of the award of the concession. The construction work for Phase 2 will begin from the date Phase 1 starts commercial operation and must be completed within 24 months. The project will use the new model concession agreement that was finalised by the Ministry of Ports, Shipping and Waterways in November last year. The private operator will have to handle a minimum guaranteed cargo (MGC) of 8.75 mt and 17.5 mt a year for Phase 1 and Phase 2 of the project, respectively. It will have to pay the contractually mandated royalty amount for the MGC along with damages if it fails to achieve the MGC in a year.

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