FEASIBILITY STUDY OF PORT TADADI

PREPARED BY:
SUBMITTED TO:
HIMANSHU ARORA (15MCL001) Dr. RAJNIKANT PATEL
AADITYA CHAUDHARY (15MCL002)
KEVAL DABASIA (15MCL003)
PRIYAL DAVE (15MCL004)
AARSH DESAI (15MCL005)
DHRUVIL GORSAWALA (15MCL006)
NANDITA MANIYAR (15MCL007)
Contents

Introduction
Analysis of competing ports
Environmental Impacts of the proposed port
Analysis of connectivity to port
Financial Viability Analysis
Concession Structure
Key Learnings and Conclusions
Reference
INTRODUCTION
Introduction

Karnataka is targeting an industrial growth rate of 12% per annum, and there has been an
increased emphasis on the expansion and growth of infrastructure sectors.
With this objective in mind, the Infrastructure Development Department (IDD), Government of
Karnataka (GoK) has identified various projects in the State for development through Public
Private Partnership (PPP) frameworks.
One such project identified is the development of a port at Tadadi in Uttar Kannada district of
Karnataka.
Since the Bellary Hospet region is rich in iron ore mines and most of the produced ore is exported
out of the country, this region has been considered as the catchment area for the analysis.
The port at Tadadi could form a gateway for trade in the Bellary Hospet region.
Methodology
Existing Movement of Iron ore by Road
Existing Movement of Iron ore by Rail
Growth Potential of Bellary Hospet Region

Bellary currently is the second fastest growing city in Karnataka after Bengaluru.
Some key factors that would further drive the growth potential of the district are set out below:
JSW Steel one of the largest steel producer in the world, and the biggest single investor in the
state has plans to acquire iron ore mines in Bellary.
An industrial park is proposed to be developed in the VADA region on an area of about 559.61
sq. km.
Karnataka Power Corporation Ltd (KPCL) proposes to develop the second phase of Bellary
Thermal Power Station (BTPS) of 500 MW at Kudatini.
Proposed Development Initiatives of the State

The State Government has proposed to

implement the Suvarna Karnataka Development
Corridor Programme throughout the length and
breadth of the State for Industrial Development.
The Corridor proposes to cover about 11 District
headquarters and more than 20 major towns
along the highways/major roads and rail links.
In addition to the proposed Industrial Corridors,
the State Government also proposes to develop
ten Special Industrial Zones on a PPP
framework, most of which will have direct impact
on trade and industry.
 ANALYSIS OF
COMPETING PORTS
Existing Ports Scenario in the State

MAJOR PORTS

At present, in Karnataka there is only one Major Port viz., The New Mangalore Port. This is located at
the southern end of the coastline and hence is predominantly being utilised by the southern districts of
the State.

MINOR PORTS
The ten minor ports of the State are as follows
Karwar Kundapur
Belekeri Hangarkatta
Tadadi Malpe
Honnavar Padubidri
Bhatkal Old Mangalore
All these ports are under the administrative control of the State Ports and Inland Water
Transport (IWT) Department
The above ports are broadly classified into three categories:

A . One all weather Intermediate Port having direct berthing facilities for vessels of 9 m. draft
and declared for handling all type of commodities for export and import viz., Karrwa.

B. One Intermediate Port (seasonal) having direct berthing facilities for coastal vessels of 4.50
m. draft/ lighterage /mechanised fishing vessels viz., Mangalore Old Port.

C. Remaining seven Ports are seasonal functioning as fair weather lighterage/fisheries Ports,
capable of handling sailing/ mechanical sailing vessels. These Ports also possess
lighterage wharves, transit sheds and suitable stacking areas.
EXPORTS AND IMPORTS IN KARNATAKA (THROUGH PORTS)

The State has the second largest deposits of

iron ore reserves in the country and accounts
for 30 per cent of the total iron ore exports
from India.
COMPETING PORTS

The port at Tadadi would face competition from existing major ports and minor ports in the region. The existing
major ports are the port at Mormugao in Goa and New Mangalore and the minor ports would be the ports at Karwar,
Belekeri and Old Mangalore.
Major Ports
Mormugao
This port is one of the oldest and major port on the west coast. The port is expected to handle traffic of around 44
million tones by the year 2013-14. The port has a two lane road link to NH-17A passing through Vasco city. A
project for four laning of 18 km stretch of NH-17B from Verna Junction on NH-17 to Mormugao Port is being
implemented by NHAI.
Nearly 90% of cargo handled at this Port is bulk cargo
consisting of iron ore and coal. Almost entire coal traffic is
moved by rail. Further, the port is installing a Wagon
Handling System for bringing iron ore from Bellary Hospet
Region. Further, the port is installing a Wagon Handling
System for bringing iron ore from Bellary - Hospet Region.
To meet the demands of traffic to be generated in the coming
years, rail augmentation is proposed to be undertaken in two
phases. MORMUGAO PORT
NEW MANGALORE PORT
This port is a modern all weather port and is the largest LPG handling port in the country. The present
total capacity of the port is 38 million tones with about 14 berths. Other facilities at the port include
transit sheds, open stockyards and liquid storage areas.

The total traffic handled at the port in 2008 09 was 36.69 million tones of which iron ore traffic
handled at the port in 2008 -09 is about 9.7 million tones. The port is expected to handle traffic of around
43 million tonnes by the year 2013-14.
The present road connectivity of the Port is through NH-48 (Bangalore-Mangalore), NH-17 (Cochin-Goa-
Mangalore) and NH-13 (Sholapur-Mangalore).
The port is also well connected to the southern
part of the country by a broad guage line
through Mangalore, Kerala and Chennai. The
Konkan Railway linking Mangalore with
Mumbai is in operation and connects the
northern part of the country to the port. NMPT
currently is proposing to undertake development
of a container terminal for handling containers
from the proposed Berth No. 18 through PPP
mode on build, operate and transfer (BOT) basis
at an estimated cost of Rs 276 crore.
MINOR PORTS

KARWAR: The port at Karwar is an all weather intermediate portwith an available draft of
6.5 7 m. The prestigious SEABIRD Naval Project is located at this port. Thetotal traffic
volume the port handles is 2.71 million tones of which iron ore forms 1.9 million tones
BELEKERI: The Belekeri port is a fair season lightrage port with iron-ore being the main
cargo exported. Currently the following three private operators are operating at the port:
Adani Export Pvt Ltd
Salgoankar Mining Industries BELEKERI
Mallikarjun shipping Pvt Ltd
The total traffic handled at the port is 6.09 million tones of which iron-ore forms 6.08
million tones.
OLD MANGALORE: This port is situated on the left bank of the Gurupur river and is
approximately 10 km south of the New Mangalore Port. The minor port at Mangalore is an
intermediate port with a draft availability of 4.5 mand is functional only during the fair
weather season from September to May. It is well connected by NH 17, 48 & 63 and the
Konkan Railway and Sourthern Railways.
Out of the total traffic of 8.9 million tones in 2007- 08, the iron traffic in the minor ports
was approximately 8 million tones.
OLD MANGALORE
RATIONALE FOR DEVELOPMENT OF THE PROPOSED
PORT AT TADADI
Out of the ports of the state, NMPT, the major port currently caters to the cargo requirements in the southern districts of the
state and is operating at 89% capacity (in 2008 2009).The northern districts of the state, especially the Bellary Hospet region
is home to significant resources of iron-ore which is currently being exported. Part of this iron ore is exported through the
minor ports at Karwar and Belekeri.

However, the draft available at these ports is less and therefore bigger vessels cannot operate at these ports and loading is
normally done through barges. Further the capacity at these ports is also not adequate to cater to the demand of this region. Due
to this, a significant amount of the iron ore is currently being transported to Ennore (in Tamil Nadu), Mormugao and
Krishnapatnam and exported from there.

Thus, a port developed in the northern coastline of the state could cater to the districts in North Karnataka especially the iron-
ore belt in Bellary - Hospet, thereby significantly improving the industrial advantage of the region.

Due to the above cited reasons, it is proposed to develop a port at Tadadi which is situated in the estuary of the Aghanashini
River. The backwaters of the river have a huge waterfront area, which makes the location a natural harbour for a port. The
proximity to the iron-ore belt at Bellary / Hospet and the connectivity in the region are added benefits for developing a port at
Tadadi.
ENVIRONMENTAL IMPACTS
OF THE PROPOSED PORT
Land Environment

Potential impact due to port location

Changes in land use pattern for example, change from agriculture, housing, etc., to port related activity
may necessitate rehabilitation and resettlement (R&R) of effected communities/villages.

Potential impact during port construction

Transport of cargoes to/from the port during the operations phase of the port may result in excessive
use of existing public infrastructure like roads, railways and in-land waterways etc., resulting in
congestion and early ageing etc. Similarly public utilities such as water supply, drainage, electrical
power etc may also get undue demand.

Potential impact during port operations

Ship traffic and discharges may cause environmental concerns on the land where they are unloaded
and stored or when they are being transported.
Water Environment
Potential impact due to port location
Impacts due to associated and ancillary port activities
Breakwaters and landfills may change current patterns and cause stagnation of water behind the
structures.
Municipal sewage also brings coliform bacteria into the port and may cause unacceptable contamination
of the harbour.

Potential impact during port construction

Pile driving, deposition of rubble, dredging, sand compaction and other construction work in water cause
re-suspension of sediments and turbid water.

impact during port operations.

Impacts on water quality due to cargo operations
Runoff from raw material storage, spills from bulk cargo handling, and wind-blown dust are possible
sources of contamination of port water. Accidental spills of toxic, harmful materials, oils or oily
compounds, and other raw materials are also possible sources of contamination of water.
Marine Environment

Potential impact due to port location

The change of littoral drift may lead to erosion or accretion in shore zones. Altered currents or
reflected waves may endanger small ships maneuvering near structures. The creation of the port may
cause changes in river flow and waterfront drainage.
The location of a port may accelerate sediment deposition in stagnant water behind structures and
cause contamination of the sea bottom.

Potential impact during port construction

Dredging may cause changes in current patterns and flows as well as salt wedge intrusion into a river
mouth or littoral drifts in the shore zone.
Disposal of dredged material on land may possibly cause leakage of harmful substances into ground
water or changes in waterfront drainage.
Potential impact during port operations
Ships generate:
Oily wastes such as bilge water, ballast water, washing water, lubricant oil and other residues in machinery
space;
Sewage and garbage; and
Cargo residues.
Discharges and spills of these wastes cause problems of oil pollution, floating garbage, unsanitary conditions,
odour and other degradation of water quality.
 ANALYSIS OF
CONNECTIVITY TO PORT
Port Connectivity

Connectivity by Rail
Currently there is no railway line connecting Tadadi to the hinterland. The nearest railway line is the
Konkan Railway connecting Mumbai and Kerala. The nearest railway station to Tadadi is at Ankola
which is about 25 km from Tadadi. The various options of connecting Tadadi with the hinterland are
set out below:
Railway line between Hubli and Ankola
Railway line between Honnavar and Talguppa
Railway line between Londa Castlerock and Tadadi
Feasibility of Hubli Ankola Railway Line

The Railways have proposed a new railway line to connect Hubli and Ankola towns. The length of
the proposed line is approximately 167 km. If this section is developed, it would establish
connectivity between the mining catchment region of Bellary Hospet and Tadadi.
Feasibility of Honnavar Talguppa Railway Line
Feasibility of Hubli - Londa Castlerock Tadadi Railway Line
The existing railway line from Bellary Hubli Madgaon could be explored for transportation of
cargo between Tadadi and the Bellary region. Though there is an existing line between Londa and
Castlerock which runs across the Ghats, it would be required to develop the rail link between
Castlerock and Tadadi which would run along the Konkan Railway line.
Connectivity by Road

The road connectivity link

between Bellary Hospet and
Tadadi would be via Hubli on the
National Highway (NH) 63. At
Hubli two options exist for
connecting to Tadadi.

Option 1: NH 63 - From Hubli

region to Ankola and NH 17
From Ankola to Tadadi.

Option 2: NH 4 From Hubli to

Tadas, SH 69 From Tadas to
Kumta, NH 17 From Kumta to
Tadadi.
Cargo availability at Tadadi Port

Based on the connectivity analysis presented above, two scenarios have been analysed for estimating
the cargo availability at the port.
Existing road conditions
Considering the existing facilities and capacities available, the maximum cargo that can be
transported on the NH 63 (Hospet Hubli) stretch which is a 2 lane road is 18.06 million
tonnes per annum. This cargo could move to either of the ports at Karwar or Belekeri on the
western coast. The present cargo capacity that can be handled in these ports is about 9
million tonnes per annum. Once the port at Tadadi is developed, there exists a possibility for
part of this cargo to be diverted to Tadadi due to better facilities and infrastructure available
at Tadadi.
After road widening
Assuming that the road stretches connecting NH 63 and 17 are widened and assuming the cargo movement
between the ports at Karwar and Belekere. An estimated total of 34.25 million tonnes per annum of cargo
would be available for the port at Tadadi after the connecting roads have been widened.
FINANCIAL VIABILITY
ANALYSIS
 Land Development

KIADB had acquired a total of 1854.29acres in 2001.

35 acres utilized for the Konkan Railway Project.
1819 acres of land is available for development of the port.

Estimated Project Cost

SR. NO. ITEM UNIT TOTAL
1. Annual Inflation % 5%
2. Concession Year 30
3. Construction month 36
4. Start of construction Day 1-Sep-10
5. Commercial Operation Date Day 1-Sep-13
6. Depreciation (written down % 10%
method)
Project Cost

Sr. No. Item Unit Total

1 Dredging Rs. Crore 700.00
2 Port works Rs. Crore 200.00
3 Cargo Terminal Rs. Crore 110.00
4 Cargo Handling Rs. Crore 315.00 The Total Project Cost taking
5 Harbor Craft Rs. Crore 110.00 into account a 3 year
6 Common infra Rs. Crore 25.00 construction period and
inflation at 5% per annum is
7 Coastal production Rs. Crore 40.00
Rs.2230.71 Crore for a port
capacity of 14.06 mtpa.
8 Navigation Aids Rs. Crore 20.00
9 Port Rail Yard Rs. Crore 30.00
10 Fire Fighting Rs. Crore 2.00
11 Technical Contingency Rs. Crore 78.00

Base Construction Cost Rs. Crore 1630.00

 Sources of Finance
The Project has been assumed to be financed through the following means:
Parameter Value
Debt : Equity ratio 2.33:1

Cost of debt 12.5 %per annum

Moratorium for debt 2 years

Repayment period for debt 9 years

Capacity Estimates
Revenue Estimates

The existing tariffs at NMPT have

been analyzed. The same have been
utilized for the viability analysis.
Operations and Maintenance Expenses
Project Viability Scenario 1: Project Viability Scenario 2:
Existing road connectivity After road widening

For a 30 year concession period the Project cost is estimated to be 2,949.5

IRR is estimated to be 8%. To crore, which includes IDC of Rs. 371
increase the rate of return such that crore.
the project is attractive for the
private sector, the Project could be
undertaken through a Viability Gap
Funding.
CONCESSION
STRUCTURE
Concession Structure

It is proposed to implement the project on a PPP Concession framework. Under this structure the
ownership of the land would always vest with the Concessioning Authority and only the development
rights would be given to the private developer (Concessionaire).

Roles and responsibilities of the Concessioning Authority

Handover Project Site free from all encumbrances to the Concessionaire as specified in the
Concession Agreement
Shifting of any infrastructure utility lines such as electric lines, water lines, drainage line, etc. (if
any)
Clearly spell out the design, construction and O&M requirements of the Project Facilities.
Clearly specify the Project completion period along with mile stones and payment terms.
Assist the Concessionaire in obtaining all required clearance for setting up of the Project Facilities.
Make payments to the Concessioning Authority (if any) on time as specified in the agreement.
Roles and responsibilities of the Concessionaire

Mobilization of funds required for the development of the Project.

Design, construct, implement, operate and maintain the Project Facilities and required support
facilities etc. as specified by the Concessioning Authority.
Operation and Maintenance the Project Facilities as per the standards specified by the
Concessioning Authority.
Completion of the Project in a timely manner.
Obtain all necessary clearances from the Government for the commissioning of the Project.
Make payments to the Concessioning Authority (if any) on time as specified in the agreement.
Handover the Project site along with Project Facilities to the Concessioning Authority on completion
of the concession period.
Concessionaire shall have right to collect revenues from the Project Facilities.
Salient features of the concession structure
The merits and demerits of the structure
The indicative bid process for the Project

A competitive two stage bid process could be followed for the selection of the private partner (the
Bidder). A two stage bid process would comprise of the qualification stage and proposal stage.
The bidder who qualifies the qualification stage would only be qualified for the proposal stage.
(i) Qualification Stage Request for Qualification document would be issued to interested bidders
(ii) Bidders who qualify in RFQ stage would be issued Request for Proposal document (RFP) along
with Concession Agreement.
Concession Period could be for 30 years.
Bid Document

Model Planning Commission document template would be used / modified for the Project.
Bidders both Single Business Entity and Consortium of Business Entities would be eligible for this
Project.
For the Project, Business Entity shall mean - A Company registered in India under the provisions of the
Companies Act, 1956, or under the equivalent law in the case of foreign Company. Copy of such
Registration Certificate should be submitted along with the Bid.
Number of consortium members shall be limited to (6) six.
Members of the Consortium would have to enter into a Joint Bidding Agreement.
Eligibility Criteria

Experience
The bidder must satisfy any one of the following experiences :
Category 1: Development of Port Infrastructure Projects.
Category 2: Operation & Maintenance of Port Infrastructure Projects.
Category 3: Development of Core Infrastructure Projects.
Category 4: Operation & Maintenance of Core Infrastructure Projects.
Financial
The bidder must satisfy any two of the following financial criteria
1. Net Worth as at the end of the recent/latest financial year.
2. Aggregate Net Cash Accruals for the last three financial years.
3. The Average Annual Turnover of the Bidder for the last three financial years.
KEY ISSUES &
CONCLUSIONS
KEY ISSUES

Detailed studies would need to be carried out to determine the technical viability of the project. Silting of the

Aghanashini River would have to be considered while assessing the technical requirements of the port.

As a result of the port being developed in Tadadi, the bulk cargo currently being moved from Karwar and Belekeri is

expected to shift to Tadadi reducing the cargo movement at these ports.

Further, given the volume of cargo which can be moved, it is unlikely that any other port in the northern part of the

coast of the state could be commercially viable after the port at Tadadi is developed.
FACTORS INFLUENCE THE PERFORMANCE OF THE
PORT AT TADADI:
The port at Krishnapatnam in Andhra Pradesh could compete with Tadadi for the iron-ore cargo
from Bellary Hospet.
The distance by rail from Bellary Hospet to the port is approximately 425 km which is about the
same distance to Tadadi as well.
An SPV has already been formed by Rail Vikas Nigam Limited, Government of Andhra Pradesh,
Krishnapatnam Port Company Limited and National Mineral Development Corporation for
implementation of Obulavaripalle-Krishnapatnam New Railway Line Project.
This line would provide the desired rail connectivity to the Hospet Bellary belt from
Krishnapatnam port.
NMPT and the Mormugoa port are currently planning to expand their existing capacities by adding
new facilities (berths). The expansion of these ports would affect the viability of the port at Tadadi.
CONCLUSIONS

The port at Tadadi appears to be viable on a stand alone basis. This is contingent upon the various
connectivity options that need to be pursued government levels.
Out of the two options of road and rail connectivity, the connectivity by road appears to be more
amenable for development in the near future as compared to the option by rail.
Increasing the road width primarily of NH 63 would serve a dual purpose of increasing the viability
of the port and improving connecting from the command region.
The viability of the port at Tadadi would not be affected by the various connectivity issues if an
industrial facility is developed near the port which uses the port for import or export of cargo. The
port would then also be viable on a stand alone basis.
There is a state government proposal to develop a power plant at Tadadi. In case the power plant
does come up at Tadadi, the viability of the port would significantly improve as the power plant
would generate additional cargo for the port, thereby increasing the revenues of the port.
Reference

Feasibility study of Port Tadadi

Thank You !!!