Although the agreement between the state government and the consortium is yet to signed with the latter still to respond to the draft agreement, the decision, announced by chief minister N Chandrababu Naidu on Tuesday, clears the way for investment proposals worth Rs 49,000 crore in the state to fructify over the next five years, according to senior officials. The consortium was finalised from among three other contenders for the project including 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 likely to take off will be the liquefied natural gas (LNG) terminal project for which at least six firms haveput in their bids including groups like the Nagarjunas, the GVK group and an American multinational which accounts for almost 60 per cent of the global LNG capacity, Kakinada port officials said.

Investment on a single LNG point is expected to be around Rs 1,500 crore, while going by the current demand projection for the hydrocarbon by forthcoming projects at Kakinada the requirement will be for at least three such berths, the officials said. In addition, 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 waiting to finalise the port development contract before taking a decision on the LNG and other investment proposals at Kakinada. The LNG proposal is at present being vetted by the state power department 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 dead weight tonnage (DWT) but with a marginal investment of between Rs 70 and Rs 70crore it will be able to handle ships of 60,000 tonnes DWT, the officials said.

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

As part of an Asian Development Bank (ADB) funded project the state government has invested Rs 130 crore on constructing three deepwater berths at Kakinada, apart from Rs 65 crore on dredging the area and another Rs 62 crore on constructing a 10x50 metre breakwater.

Despite the three new berths utilisation at the port has not been encouraging so far. Occupancy stands at 15 per cent with revenue earnings at just Rs 5 crore last year. However, going by indications things might improve this year, officials said. 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 docking,they said.

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