Also, govt approves APSEZ proposal to acquire GoAP’s 10.4 per cent stake in Gangavaram Port at ₹120/share
The Andhra Pradesh Government has approved the proposal of APSEZ (Adani Ports and Special Economic Zone Ltd.) to transfer 162,855,000 (one sixty-two million eight hundred fifty-five thousand) shares of Windy Lakeside Investment Ltd. of 31.50% in Gangavaram Port Limited (GPL) in favour of APSEZ and also change of ownership.
The State Cabinet chaired by Chief Minister YS Jagan Mohan Reddy approved the merger of GPL with APSEZ. Also, it accorded approval for the proposal of APSEZ for the acquisition of GoAP’s stake (10.40%) in GPL at ₹120/share translating to consideration of ₹645 crore.
These changes in terms of the concession agreement will lead to the closure of the share purchase contract that was signed during the concession agreement. After the change, GoAP may need to sign another concession agreement with the new SPC as per terms of the original concession agreement for safeguarding the obligations of the original concession agreement.
The share of GoAP, once disinvested, will result in the State earning ₹600-700 crore and GoAP having lesser control in Gangavaram port matters. Also, the dividends earned through the last 3-4 years (₹83 crore earned in the last three years) ceases as GoAP divests. Already Adani Ports has acquired a 90 per cent stake in the DVS Raju promoted GPL.
According to the Government, the revenue share is expected to substantially increase due to more business. GPL, by handling 32-35 million tonnes per annum, is paying revenue share of about ₹22 crore per Year. GPL is handling only 30-35 million tonnes per annum despite having the capacity to handle 50 million tonnes. The new entity operated by APSEZ is likely to increase the business to 40-45 million tonnes resulting in an expected revenue share of ₹30 crore per annum in short term and up to 100 million tonnes (expected revenue share of ₹70 crore per annum) in the medium term.
The State expects APSEZ as a leading port operator in the country is likely to substantially increase the traffic and business of Gangavaram port and invest in new businesses such as Container, Liquid and LNG terminals and create higher revenue share for GoAP and value.
This will lead to a substantial increase of EXIM activities through the state of AP, resulting in higher tax earnings, more employment, and revenue growth.
Besides, it is estimated that the LNG business can earn VAT for the state at 1 million tons of LNG import and earn VAT of ₹1,200 crore. Besides, an increase in port cargo traffic will also result in more skilled and unskilled employment to handle about 100 million tonnes tons per year.
Source : The Hindu Business Line