However, the agreement between the state government and the combine is yet to be signed as the latter has not yet responded to the draft agreement.

The decision, which was announced by chief minister N Chandrababu Naidu on Tuesday, clears the path for investment proposals worth Rs 49,000 crore in the state to fructify over the next five years, said senior officials.

The ISPL consortium was finalised from among three other contenders for the project which included the Consortium Perkapalan Berhad of Malaysia, ABG Heavy Industries and Continental Warehousing with Pembinna Red Zai Bhd., also of Malaysia.

The first of the port dependent proposals which are likely to take off will be the LNG terminal project for which at least six companies have bid including groups such as the Nagarjunas, the GVK group and an American multinational which accounts for almost 60 per cent of the global LNG capacity, Kakinada port officials told The Financial Express.

Investment on a single LNG point is expected to be around Rs 1,500 crore. Going by the current demand projection for hydrocarbons in the forthcoming projects at Kakinada the requirement would be for at least three such berths, the officials said.

In addition to this the Bharat Shell has also proposed to set up an off-shore berth at an investment of Rs 70 crore at Kakinada.

The state government was, infact, awaiting to finalise the port development contract before it could decide on the LNG and other investment proposals at Kakinada. The LNG proposal is presently being whetted by the power department of the state government and the cabinet is expected to take up the issue soon, they said.

The existing deepwater port at Kakinada can handle ships of 25,000 tonnes DWT but with a marginal investment of Rs 70 crore it will be able to handle ships of 60,000 tonnes DWT, the officials said.

While the port would be handed over to the private party on a 20-year lease, the state government would receive 20 per cent of the revenues over the next five years. Immediately on taking over the port the private party would be investing close to Rs 287 crore in including at least three more berths.

As part of an ADB-funded project the state government has already invested Rs 130 crore on constructing three deepwater berths at Kakinada apart from Rs 65 crore on dredging the area and Rs 62 crore for constructing a 10x50 metre breakwater.

Despite the three new berths utilisation the port has not been so encouraging so far with occupancy being only 15 per cent with revenue earnings of only Rs 5 crore last year. However, going by the indications things might improve this year, say officials. As against the handling of 80 ships for the whole of last year, the first four months of the current year itself has seen 56 ships coming in, they said.

The scenario would change with the privatisation of the port. With the company pumping in close to Rs 300 crore in the short-term the traffic is expected to increase manifold. While there is space to build upto 22 berths a master plan for 13 berths has already been approved for construction on the 1400-acre area within the purview of the port authorities, the officials said.