JSW Infrastructure Ltd, the port unit of Sajjan Jindal-led JSW Group, has sought permission from the Centre-owned Paradip Port Authority to handle “other cargoes” at its soon-to-be-commissioned coal export terminal at the port located in Odisha, government sources said.
The development is a sign that coal terminal operators are sceptical about the future and viability of their facilities that are typically awarded for a concession period of 30 years as the world pivot towards renewables to deal with climate change goals, drastically cutting the usage of fossil fuels such as coal.
Paradip Port Authority had awarded the contract to mechanise its East Quay berths 1,2 and 3 to Paradip East Quay Coal Terminal Pvt Ltd, a special purpose vehicle fully owned by JSW Infrastructure, for handling coal exports, with an investment of ₹1,438 crore.
30-mt capacity facility
The 30 million tonne (mt) capacity facility is expected to be commissioned in the next few days.
“Coal usage is going to go down with the world moving towards green energy,” said a port industry consultant, pointing to the Glasgow agreement on climate change.
“To sustain the terminal for the long term, permission to handle other cargo becomes imperative. Relying on coal for 100 per cent of the capacity utilisation may not work out,” the consultant said.
Other cargoes
JSW Infrastructure has sought permission from Paradip Port Authority to handle other cargoes such as iron ore and limestone, a government source briefed on the development said.
However, permission to handle cargoes other than the one for which the concession was awarded by state-owned major ports is a tricky exercise.
While the new model concession agreement for private investments in setting up cargo handling terminals at major ports in future incorporates provisions to allow change in cargo other than the one for which they are bid out, existing and upcoming terminals such as the JSW facility have no scope for such a change.
“Request for change in cargo will require approval from the Ministry of Ports, Shipping and Waterways,” the government source mentioned earlier said.
JSW Infrastructure did not respond to an email seeking comment.
While announcing the revised model concession agreement for public-private-partnership (PPP) projects at major ports, Sarbananda Sonowal, Union Minister for Ports, Shipping and Waterways, explained the rationale for introducing provisions on change in cargo.
“There have been cases in the past wherein due to external and unforeseen factors, traffic for a particular commodity has dropped during the concession period thereby impacting the overall viability of the terminal. The concessionaire did not have flexibility to handle a different cargo and the asset constructed was not being utilized optimally,” Sonowal said noting that the provision will give flexibility to undertake change in cargo in such situation and reduces risk for the PPP operators.
This provision, though, will be made applicable prospectively and not retrospectively.
Source : The Hindu Businessline
