Decreasing Iron ore exports from India causes Paradip plots’ auction and form new tender rules for it. The port authorities intend to generate revenue through auctions as returns from Iron ore exports have fallen down.
Paradip Port Trust (PPT) has recently floated tenders for the manual and mechanical Iron ore plots (space in ports used by mining companies to store the material). Plots are auctioned because the port is facing a declined profit margin owing to low Iron ore exports.
India’s Iron ore export has decreased gradually over past few years. Iron ore exports in the country during Apr-Dec period of FY14 has fallen by 28 percent to 11.8 MnT which was about 15.5 MnT in the same period of FY13. The exports are affected mainly because of increased export duty and the ban imposed in Goa and Karnataka. Although the ban from Karnataka has been lifted, yet the mining operations have not begun there to an optimal level.
PPT has decided to keep same auction price for all plots. The bidders will have to counterpart their prices with the uppermost bidding price quoted by the topmost bidder. Auctions will be for 27 manual and 19 mechanical Iron ore plots The mechanical plots are of 5,000 square meter (sqm) each and manual plots of 3,000 sqm each, divided uniformly for equal price. The port authorities have set a base price of INR 9/sqm for the manual plots. Whereas, the price for mechanical plots are fixed at INR 12/sqm. Each bidder will have to quote above INR 525/sqm, the fixed premium price for the tender.
The minimum Guaranteed Traffic (MGT) fee for manual plot is about INR 2 million and INR 5 million for mechanical plot. 12 out of 27 manual plots will be auctioned in Feb, 2014 while the rest will be open for bids in April. As per the new rules decided by the port trust, the plots will be auctioned for 11 months and will not be permitted to renew the license after that as it was earlier.
Despite, falling Iron ore exports from the country, Paradip Port had aimed of exporting about 5 MnT in FY14 out of which 3 MnT are exported and the remaining is expected to be exported in Q4 of FY 14.