Quote:Odisha Signs VGF Agreement With MSC To Start Containerised Cargo Handling At Paradip Port
The Odisha Government has signed an agreement with the Mediterranean Shipping Company (MSC) for Viability Gap Funding (VGF) to encourage containerised cargo export/import shipping through Paradeep Port.

February 17, 2024
9:20 am

Source: Pragativadi
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Companies and business entities located in Odisha are doing huge volumes of containerized cargo exports and imports. At present, they are doing this almost entirely through seaports outside Odisha, especially through Kolkata/Haldia and Vizag ports and incurring extra logistics costs which is making their business less remunerative. Moreover, by shifting export/import activity to seaports outside Odisha, the State is losing huge opportunities for job creation inside Odisha.

Containerized cargo export/import happening through Pradeep Port will immensely help exporters and importers of Odisha (by way of reducing their logistics costs). It will also lead to the generation of a huge number of direct and indirect employment in Odisha. Moreover, import and export through Pradeep Port will also generate substantial tax revenue for the State Government.

MSC is the world’s largest container shipping company, accounting for about 23% of the Global share. Its feeder ships will come to Paradeep Port twice or thrice a month. The Exim container cargo of Paradeep Port will be connected to Colombo from where MSC will take the cargo to any part of the globe in its mother ships (i.e. larger ships). Once business at Paradeep Port grows, MSC’s feeder ships will come to Paradeep Port more frequently.

If MSC does not get enough business at Paradeep, the Government of Odisha will compensate MSC as per the VGF agreement. MSME Department had floated an advertisement in November’2023 asking for a VGF proposal from shipping companies. Five shipping companies, including MSC, had responded to this advertisement. MSC was selected for the VGF agreement as its VGF requirement was lower than that of the other four companies. MSC is likely to start its container cargo export/import shipping service from Paradeep Port in March 2024.

Quote:The CCEA also approved expansion of Paradeep port in Odisha at an initial cost of ₹ ₹3005 crore to enable it to handle large cargo ships under Public-Private Partnership (PPP) mode. This includes development of the new Western Dock and capital dredging by the selected Concessionaire at a cost of Rs.2,040 crore and Rs.352.1 crore respectively; and investment by Paradip Port to the tune of Rs.612.5 Crore towards providing Common Supporting Project Infrastructure.

“On commissioning of the project, it shall cater to the requirement of coal & limestone imports besides export of granulated slag & finished steel products considering the large number of steel plants established in the hinterland of Paradip Port. The project shall also facilitate (i) de-congestion of the Port, (ii) reduce Sea freight making coal imports cheaper, and (iii) boost the industrial economy in the hinterland of the port leading to creation of job opportunities," the Cabinet Secretariat said in a statement.