VK Bhat, CEO, Ports and Jetties, Essar Projects goes into the details surrounding Essar's return to the marine construction scene.
As a company, Essar commenced its construction activity from ports and jetties way back in 1969; they started with the Chennai Port and slowly expanded into marine construction, and moved on to Mumbai in the late 1970s. Marine construction then went into offshore. There is a lot of synergy between activities like shipping, marine, offshore, all to do with marine environment. So, from 1975 onwards, we were deeply involved in marine construction and the construction of ports and jetties, offshore pipelines, breakwaters and other construction, including lot of dredging. Slowly, the offshore segment has grown and become separated from the marine one.
As a marine construction firm, we were also constructing various ports and jetties. This continued till the 1990s and later on, Essar decided to have their in-house and captive ports for their own use. So, a lot of energy has gone mainly into in-house construction, up to 30 per cent business was coming from outside. In 2003-04 we left the ports and jetties; now, we are back with a bang.
This SBU has around Rs 2,200 crore worth of jobs in hand. These projects include the IWA, on a port in Myanmar. Two other jobs are in Paradip. We are also in charge of the Hazira port expansion.
With BOT, there is a concerned agreement you have to go with, regarding land clearances, and other prerequisites. In the concession agreement, other operators should not be allowed to take part of the cargo; we have seen that sometimes the contract is given to one to handle, then someone else handles it, so the revenue comes down. Also, the Environment Ministry mandate that no other port should come up within 100 km of the existing port.
The volume of port capacity our nation has built over the last 60 years is required in the next six to seven years. Regarding financial closure, the BOTs have been taken by our sister company, Essar Bulk Terminals (EBTL), so operational capabilities are with EBTL.
Therefore, we do basic construction and hand over the project to EBTL for the operations.
Our expansion graph is looking healthy. We already have more than a billion rupees worth of contracts in the pipeline. We also have huge expansion plans in the African countries. So far, we have constructed approximately 150 mmtpa ports.