HYDERABAD - The Andhra Pradesh Government could opt for the operation and maintenance (O&M) model to induct private entities to run the three new ports it is building with investment of some Rs 15,000 crore.

The A P Maritime Board has asked the State Government to opt for the O&M model to run the ports after they are constructed, instead of bidding out individual cargo berths on public-private-partnership (PPP) basis. The A P Maritime Board is the State Government agency tasked with developing ports in Andhra Pradesh. “We realised there is no fun in earning a revenue share of 2-3% as in the case of some fully privatised ports. In contrast, we are getting a revenue share of 22% from the Kakinada deep water port which was built by the State Government and given to a private firm on the O&M model,” the A P Maritime Board official said.

The State Government invested more than Rs 600 crore in 1998 for building the Kakinada deep water port from which it is earning a revenue share of more than Rs 200 crore every year from the O&M operator. “We have suggested to the government to adopt the O&M model to run the three new ports. Like the Kakinada deep water port, we are expecting a revenue share of 22-25 per cent from each of the three new ports. That gives good money,” the official said.

The O&M model for privatising new ports or individual cargo berths has been used only once by a State or the Central Government: by the Andhra Pradesh Government for privatising the deep-water port at Kakinada in the East Godavari district.

The State governments, including Andhra Pradesh, have typically followed the public private-partnership (PPP) model to build new ports wherein the successful bidder will be tasked with constructing the entire infrastructure including breakwater, cargo handling berths, undertake dredging and install equipment.