The Andhra Pradesh government on June 4, Friday, constituted a six-member Empowered Committee of Secretaries to determine the process of disinvesting the states 10.40 per cent stake in Gangavaram Port Limited (GPL) even as it approved the merger of GPL with Adani Ports and SEZ Limited (APSEZ). In an order, Chief Secretary Aditya Nath Das said the state government accepted the transfer of 31.50 per cent shares of Windi Lakeside Investment Limited in GPL to APSEZ. He said the government also approved the definitive agreement between APSEZ and D V S Raju and family, promoter of GPL, for acquiring 58.10 per cent of their shares.
"The state government accepts the proposal of merger of GPL with APSEZ, with a condition that APSEZ shall set up a separate Special Purpose Company (SPC) to enter into a revised concession agreement on the same terms and conditions of the original concession agreement for the remaining period," the Chief Secretary said in the order.
Das said an Empowered Group of Secretaries, headed by Chief Commissioner of Land Administration, Neerabh Kumar Prasad, would implement the process of 'disinvestment' and merger of GPL with APSEZ and submit its report to the government in 60 days.
The state government provided 1,800 acres of land, valued at Rs 54 crore, as its 10.40 per cent equity in Gangavaram Port. The Port began commercial operations on April 17, 2009 and has so far remitted Rs 277.97 crore to the state government, including Rs 183.56 crore as 2.1 per cent revenue share out of the gross income.
After acquiring the stakes of Windi Lakeside and D V S Raju and family, APSEZ proposed to buy out the AP governments 10.40 per cent share as well for Rs 645.1 crore or allot shares for the same value in the merged entity. The AP Maritime Board, which oversees ports in the state, had engaged SBI Capital Markets Limited to evaluate the APSEZ proposal.
Accordingly, SBICAP recommended that the state government disinvest its stake in line with the Disinvestment Policy of the Government of India for a better price discovery. SBICAP gave its firm option that the disinvestment by direct sale was the 'best option' available for the state.
According to government estimates,the new entity operated by APSEZ could increase the port business to 40-45 million tonnes from the current 32-35 million tonnes in the short term and generate a revenue share of Rs 30 crore per annum to the state. In the medium term, the government estimates that the cargo handling could increase to 100 million tonnes, giving a revenue share of Rs 70 crore per annum.
"APSEZ is the leading port operator in the country and due to their rich expertise and strength in the port sector, they are likely to substantially increase the traffic and business of Gangavaram Port and also invest in new businesses such as Container, Liquid and LNG terminals and create higher revenue share (for the state government) and value," a government note said.
This would lead to substantial increase in export-import activities through the state, resulting in higher tax earnings, more employment and revenue, the note said. Besides, the state estimates that LNG and petroleum business could earn value-added tax to the tune of Rs 1,200 crore (on import of one million tonnes of LNG). Enhanced port operations could result in creation of an additional 1,000 jobs directly and 1,500 indirectly. The Empowered Committee of Secretaries has been constituted in this backdrop to go about the process.