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i-maritime News Service

Container terminal project at Chennai port may be scrapped - 2013-07-04


The Rs 3,700-crore mega container terminal project at Chennai port is likely to be scrapped in the present form due to poor response from bidders.

At a board meeting on Thursday, the trustees of the Chennai Port Trust asked the port’s management to chalk out a revised plan quickly.

Essar group was the only company interested in the project. However, it quoted 5.15 per cent as revenue share for the port. This was shot down by the trustees stating it was low for such a large project. The port gave an extension till June 26 for a revised bid from companies. However, none of the bidders showed interest. Even Essar did not increase its bid, said two trustees who did not want to be named.

A senior port official said that when DP World and Port of Singapore Authority (the two companies which are currently operating container terminals) offered over 35 per cent as revenue share, it will not be feasible to accept 5.15 per cent.

The port trust touted the mega terminal as one of its prestigious projects. The Union Cabinet sanctioned the project in 2010. The plan was to have two new breakwaters (total length 4.5 km), and a continuous quay length of 2 km, which would ultimately have had 22-metre ‘alongside depth’ to handle ultra-large container ships of over 15,000 20-foot equivalent unit capacity and 400 m long.

The terminal was planned to be built in ‘build, own and transfer’ model. The cost of dredging, floating crafts and navigational aids — estimated at Rs 561 crore — was to be borne by the port trust. The private operator was to invest on berth and breakwater construction, reclamation of back-up area, handling equipment and other landside infrastructure at a cost of Rs 3,125 crore.

There are indications that the port may develop the terminal in a phased manner, as is being done at Ennore Port.

“Given the market conditions, we have been continuously saying that the mega container terminal will not be a viable project. This was evident from the poor response from the bidders,” said a trustee.

The board want the port to either look at developing a smaller container terminal, or at options like building a multi-purpose cargo handling berth. Since the space allotted for the project already has environmental clearance, the port can come up with an alternative and feasible proposal quickly, he said.

Source: The Hindu Business Line