It comes even as the government approved GPL’s merger with Adani Ports and SEZ Limited.
On Friday, June 4, the government of Andhra Pradesh formed a committee of six-member empowered secretaries to determine the process of divesting the state’s 10.40% 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 agreed to the transfer of 31.50 percent of Windi Lakeside Investment Limited’s shares in GPL to APSEZ. He added that the government had also approved the definitive agreement between APSEZ and DVS Raju and the family, promoters of GPL, for the acquisition of 58.10 percent of their shares.
âThe state government accepts the proposed merger of GPL with APSEZ, on the condition that APSEZ establishes a separate Special Purpose Company (SPC) to enter into a revised concession agreement on the same terms and conditions as the initial concession agreement for the remaining period, âthe chief secretary said in the order.
Das said a group of empowered secretaries, led by Chief Land Administration Commissioner, Neerabh Kumar Prasad, would implement the process of GPL’s âdivestmentâ and merger with APSEZ and submit its report to the GPL. government in 60 days.
The state government provided 1,800 acres of land, valued at Rs.54 crore, as a 10.40% stake in Gangavaram Port. The port started commercial operations on April 17, 2009 and has so far remitted 277.97 crore rupees to the state government, of which 183.56 crore rupees accounting for 2.1 percent of gross income. .
After acquiring the shares of Windi Lakeside and DVS Raju and his family, APSEZ offered to buy back the shares of the AP government at 10.40 percent also for 645.1 crore rupees or to allot shares for the same value in the merged entity. The AP Maritime Board, which oversees the state’s ports, had engaged SBI Capital Markets Limited to assess APSEZ’s proposal.
Accordingly, SBICAP recommended that the state government divest its stake in accordance with the divestment policy of the Indian government for better price discovery. SBICAP gave its firm option that divestment through direct sales was the âbest optionâ available to the state.
According to government estimates, the new entity operated by APSEZ could increase port activities to 40-45 million tonnes from 32-35 million tonnes currently in the short term and generate a revenue share of Rs 30 crore per year for the State. In the medium term, the government estimates that cargo handling could reach 100 million tonnes, which would give a revenue share of Rs 70 crore per year.
âAPSEZ is the main port operator in the country and, due to its rich expertise and strength in the port sector, it is likely to significantly increase the traffic and activities of Gangavaram port and also invest in new businesses such as container, liquid and LNG terminals. and create a higher revenue share (for the state government) and value, âa government memo said.
This would lead to a substantial increase in import-export activity across the state, resulting in higher tax revenues, more jobs and more income, according to the note. In addition, the state estimates that LNG and petroleum companies could earn a value added tax of up to Rs 1,200 crore (on importing one million tonnes of LNG). Improving port operations could lead to the creation of 1,000 additional jobs directly and 1,500 indirectly. The committee of empowered secretaries was set up in this context to carry out the process.