In the recent past there have been many steps towards towards capacity building, modernization and development in the Vizag Port. The projects have been cleared with PPP – Public Private Partnership model for operations. The idea behind this was quick development and resource handling to address competition and competence. It has not happened that way in entirety. Disadvantages accrued due to market conditions and levy of rigid tariffs have ailed the PPP projects.
Vedanta Group was given the license for operating the cargo berth in the outer harbor in Vizag Port. Private models in the Gangavaram port are affecting the PPP projects in Vizag Port because of their favourable tariffs and terms. Vedanta had taken up the 10 million tonnes capacity, coking coal and steam coke handling berth. 640 crores was the building cost of this project and it is ailing now. TAMP or Tariff Authority for Major Ports have enforced an inflexible tariff structure on the port.
Not just Vedanta group but other players operating in the same model are suffering because of differential terms of business. These are Adani group, SEW and Alba groups.
Major roadblocks:
Storage cost vis-a-vis Private Ports is a major cause of crisis. The steep storage charges have rendered operations difficult. Competitive storage costs by Gangavaram have made businesses chose them over Vizag port. Private ports are offering 90 days of free storage as against 10 days by TAMP restrictions in ports under PPP. The request has been raised for a level field for operators to work in.
Cargo handling capacity remaining unused because of favourable terms of competitors. The PPP projects have got the capacity, the operational and capacity efficiency which are not being used optimally. This adversely affecting the profit viability.
The Vizag port is thus languishing under rigid tariff impositions. Petitions have been made to TAMP for looking into the rate differences and viability issues.