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Govt starts process to take away Rewas port from RIL

MMB had signed a concession agreement with Reliance Group for the project for a period of 50 years starting October 2002

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Reliance Industries may soon have give up land to develop proposed port at Rewas near Mumbai.

The Maharashtra Maritime Board (MMB) has floated a tender to ascertain the value of the port near Mumbai so that the government can take over the port project from RIL.

RIL has planned the port near its proposed special economic zone in Raigad, but scrapped the SEZ, putting the port plan in limbo.

"MMB is seeking services from qualified financial consultants to assist them in undertaking a valuation exercise of identified assets either created or acquired including land bank of Rewas Ports and prepare a report accordingly," said an MMB official.

At present, RIL arm Reliance Logistics & Ports holds a 55% stake in Rewas Ports Ltd, a special purpose vehicle that was created for development, operation and management of the proposed port. The rest of the stake is held by Amma Lines (24%), MMB (11%) and Jai Corporation (10%).

The sole purpose of the valuation report is to compute the value of tangible assets and liabilities of the port project, including the expenditures incurred by Ambani-led company, the official said, adding that the idea is to ascertain how much the government will have to pay the company as "compensation" or "termination charges", in case it cancels the concession agreement.

DNA Money, in its April 24 edition, had reported on the union government considering taking over the all-weather deep-draught port from Reliance Industries and giving it to JNPT and MbPT for development.

MMB had signed a concession agreement with Reliance Group for the project for a period of 50 years starting October 2002 and Rewas Port was given 834 hectare of inter-tidal land.

The plan was to construct Rewas Port in three phases to house container and coal terminals as well as cement and liquid berths, but nothing has been developed so far. Thus, the requisite time frame to initiate construction and operate the port has got lapsed, making government eligible to take over the project.

As per the latest plans being discussed within the ministry, the state of Maharashtra along with port authorities - Mumbai Port Trust (MbPT), Jawaharlal Nehru Port Trust (JNPT) and MMB - will jointly develop the Rewas Port at the entrance of Dharamtar Creek.

The port project has not taken off as Reliance's plan for developing Maha Mumbai Special Economic Zone, to be spread over 35,000 acre in Raigad district of Maharashtra, was scrapped and the firm has been asked to pay waterfront royalty charges to MbPT.

Reliance has refused to give in to MbPT's demand of around Rs 950 crore for allowing the use of its waters or channel under its jurisdiction.

As a part of the initial discussions with the ministry, the first step will be to explore alternatives by offering RIL an option to pay waterfront royalty charges or allow MbPT to have equity in the port company.

If a common consensus is reached over giving equity to MbPT, there is a possibility of RIL's port plans getting a new lease of life. Otherwise, it may turn out to be a game changer for MbPT and JNPT, who are looking at expansion options. This would be right next to their existing set-ups, but congestion at the channel will be an issue of concern.

At JNPT, the fourth terminal is already under-construction and another port is being planned at Wadhavan near Dahanu in Maharashtra, which has been witnessing opposition from locals.

As for MbPT, with their port land development plans, they may need another location to ensure cargo volumes don't decline.

...& ANALYSIS

  • MMB had signed a concession agreement with Reliance Group for the project for a period of 50 years starting October 2002
     
  • The plan was to construct the port in three phases to house container and coal terminals as well as cement and liquid berths, but nothing has been developed so far
     
  • The requisite time frame to initiate construction and operate the port has got lapsed, making government eligible to take over the project
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