The state Cabinet which met here on Friday, approved the proposed agreement between the consortium and the state government awarding the Rs 400-crore project to the private sector firm. The anchorage port which provides wherewithal to 10,000 people as of today, will not be affected with the privatisation of the Kakinada port, state minister for roads and buildings S V Subba Reddy clarified. The anchorage port will continue to be operated by the state government, he stressed.

Three other companies including the $200 million Konsortium Perkapalan Berhad (KPB), headed by Malaysian Prime Minister Mahaathir Mohammad's son Mirzan Mahatir, Mumbai-based ABG HeavyIndustries Ltd, Continental Ware Corporation along with Pembinaan Redzai SDN BHD of Malaysia had bid for the project.

The development of three berths was completed last year at a cost of Rs 294 crore of which Rs 246 crore had come through Asian Development Bank (ADB), loan.

International Sea Ports will takeover these three berths at the deep water port on an operate, manage, share and transfer (OMST), basis while it will develop one more berth on a build, operate, manage, share and transfer (BOMST), basis, the minister informed.

The contract has been awarded to the Singpore-based company on a 20-year concession and it will complete the project in two phases. During the first phase ISP will invest Rs 287 crore within 18 months of being awarded the contract. In the second phase the company will put in an additional Rs 109 crore, he said.

The state government is also taking performance securities while laying down penalties for failure to perform according to certain fixed milestones for theimplementation of the project.

While the AP government will continue to be the conservator for the port, ISP will be given the first right of offer and refusal keeping in view the optimum utilisation of the existing facilities in the future.

At the same time the state Cabinet also decided to earmark 1100 acres at Gangavaram for the development of a new port to ease congestion at the Vizag port, the minister said. This includes 700 acres from the Paderu area while the remaining 400 acres have already been acquired adjacent to the Vizag steel plan for future expansion of the proposed project, Reddy said.