Ups and downs in India port sector - PPP projects

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Ups and downs in India port sector - PPP projects

Given the desperate need of maritime infrastructure in India, each port trust wants to win the race to attract traffic volume to its berths. This battle is leaving behind a few projects that will not finally see light and others that are emerging with good perspectives.

Find below a summary of main facts that took place in the last days regarding PPP projects currently in tender process:

Visakhapatnam Port Trust's container terminal extension

Visakhapatnam Port Trust (VPT) on Monday, November 18th, opened the bid offer submitted by Visakha Container Terminal Private Ltd (VCTPL) for extension of container terminal at a cost of Rs.6,330 million (US$147 million).

An official of VPT confirmed that the tender committee had opened the lone bid as per schedule. The decision on the percentage offered by VCTPL on gross revenue share was not immediately known.

VCTPL developed the existing terminal on June 26, 2003 following a 30-year concession agreement as a joint venture between Dubai Port World and United Liner Agencies.

The Indian Cabinet Committee on Economic Affairs cleared the project in April this year. VCTPL was the lone bidder earlier offering 10 per cent of gross revenue share to VPT, which the latter rejected. During the re-bidding also, VCTPL emerged as the lone bidder. The tender committee opened the bid offer on Monday but did not disclose its decision.

The project, would result in an the addition of 0.54 million TEUs (twenty-foot equivalent units) to the existing capacity of 0.40 million TEUs. The expansion of the terminal will be carried out by the bidder on a design, build, finance, operate and transfer (DBFOT) basis for a period of 30 years.

Industry sources said that the lack of interest among bidders can be attributed to the fourth container terminal coming up at Jawaharlal Nehru Port Trust (JNPT) in Navi Mumbai with a cargo capacity of 2.4 million TEUs. JNPT project is located in Mumbai, which is already an established container hub generating a huge business while Vizag is still growing. According to sources, banks would be more willing to support projects there.

Jawaharlal Nehru port fourth terminal concession

Jawaharlal Nehru Port Trust has announced that seven companies have qualified  for the Rs 8,0000 million (US$1.8 billion) fourth container terminal project.

Adani Ports, Dubai Port World, APM Terminals, Port of Singapore Authority, Sterlite Ports, United Liner Agencies and International Container Terminal Services (ICTSI) have qualified to bid for the terminal

Essar Ports has failed to qualify for the project because it fell short of the value of work done in the past to meet the criteria.

According to JNPT officials, the minimum qualifying criteria for the amount of work done in the past was revised to about Rs 120,000 million by JNPT on July 16 from about Rs 40,000 million earlier. However, the submission made by Essar Ports on August 18, had it at Rs 56,000 million, thus failing to meet this minimum standard.

The fourth container terminal is going to be 2,000 metres in length adding 4.8 million TEU (twenty-foot equivalent units) of capacity per annum for JNPT, which is India's largest container port. JNPT currently has a capacity of over 4 million TEUs. JNPT presently has three container terminals, out of which only one is operated by the port, while the other two are operated by DP World and Gateway Terminals on PPP basis.

Mega container terminal PPP at Chennai Port

Following two failed attempts, the Chennai Port Trust (ChPT) has decided to drop its plan of developing mega container terminal and instead go in for a multi-purpose terminal to handle different types of commodities.

In early November, Ernst and Young was appointed to provide Transaction Advisory Services for the development of mega terminal. Henceforth, it would be referred as 'Outer harbour development project.'

According to informed sources, the consultant has been given 12 weeks time to submit a Detailed Project Report on how the project could be made attractive in terms of investment and revenue sharing, the engineering aspects and types of commodities that could be handled.

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