Nellore: Chief Minister Y S Jagan Mohan Reddy’s plans may suffer a major setback if the corporate giant Adani Group acquires a majority stake in Krishnapatnam port. The deal to acquire a 70 per cent stake in the Navayuga-owned Krishnapatnam port for Rs 5,500 crore by the Adanis is said to be in the final stages and an announcement is expected in the next few days.
Navayuga aggressively pushing the Adani deal comes soon after the Chief Minister met Prime Minister Narendra Modi earlier this month to request that the Centre should build a port at Ramayapatnam as part of fulfilling the assurances given to AP during bifurcation.
Ramayapatnam port is close to Krishnapatnam and a rival port so close by will adversely impact the cargo flow and revenues of Krishnapatnam port. Once the Adani Group acquires Krishnapatnam, it is unlikely that Mr Reddy can convince the Centre to create a competitor for Adani.
A competitor to Krishna-patnam can adversely impact the profitability and revenues, if not viability, of the port and post an Adani investment, in the current economic env-ironment, the Centre may not find it attractive to invest government funds in such a risky venture.
The Navayuga group with its political clout has successfully been stalling another greenfield port at Duggarajapatnam or Ramayapatnam, fearing competition to Krishnaptnam port.
Adanis get Krishnapatnam
With Adanis, who enjoy great clout at the Centre, particularly with Prime Minister Narendra Modi, at the helm of Krishnapatnam, another green field port in Andhra Pradesh may remain a non-starter.
The Kiran Kumar Reddy government in the undivided state had suggested that the Centre build a major port at Ramayapatnam. The location was shifted to Duggarajapatnam, apparently as part of the strategy to kill the proposal.
Sources said Mr Reddy realised that a port at Duggarajapatnam would never take off due to its proximity to the Sriharikota space launching station and Pulicat Lake. “We too changed our strategy and urged the Centre to build a port at Ramayapatnam,” a senior official said.
The TD government was an ally of the NDA for a larger part of 2004-19 and so never pushed strongly for a rival to Krishnapatnam.
The move of the CVR Group, which is managing the port, to offer majority shares raised many eyebrows considering that the port had successfully overtaken several of its competitors in the region, including Chennai, Haldia and Kakinada, with regard to cargo handling during the 2018-19 financial year.
Politics might not be the only reason behind the decision, and the group might be divesting keeping cash flows and other financial and business interests in mind too in capitulating before the Adani Group’s effort to take control, which it had earlier resisted successfully.
The cargo handled by Krishnapatnam port (which was established in 2008) in 2018-19 was three times more than Kakinada port. While Kakinada handled 18 million tonnes last year, KPCL handled 54.4 tonnes, more than Chennai port (53 million tonne), which is one of the first ports established in the country.
Krishnapatnam port was targeting to exceed the 65.3 million tonnes of cargo handled by Visakhapatnam Port also this year. The financial contribution of Krishnapat-nam port to the Centre is `10,000 crore. About 55 per cent of the cargo revenue of railways in the zone was also from this port last year.
Krishnapatnam handled 1.18 lakh containers in 2015-16, 2.55 lakh containers in 2016-17, 4.81 lakh containers in 2017-18 and 5.01 lakh containers in 2018-19.
Sources said that senior officials from Adani Ports and Special Economic Zone have been camping in Krishnapatnam port to finalise the deal. They said that the current management may continue to manage the port even after the entry of the Adanis.
Krishnapatnam port officials and representatives of the Adani Group have remained tight-lipped on the subject.
