Large companies like Adani Ports and Special Economic Zone, DP World, Jan De Nul, Vedanta Group, JM Baxi & DBGT were some of the major players who have evinced in the ₹7,056 crore outer harbour project at Thoothukudi for which a re-tender was issued in December. Meanwhile, the Viability Gap Funding (VGF) for the project has been increased to make the project attractive.
Officials from the large companies participated in the pre-bid meeting held last week, according to sources.
On VGF, the RFP document said it would be limited to a maximum of ₹1,950 crore or an actual quote, whichever is lower. However, the Detailed Project Report said, “Government support as VGF for construction of breakwater, dredging in the basin and channel and fund construction of the project in the tune of ₹2,500 crore.”
The financial analysis shows that the project is an edge of the viable on a standalone basis. The proposed outer harbour construction is almost the Greenfield Port, construction of a world class greenfield port requires heavy investment in civil works such as breakwater, dredging and reclamation that does not generate any direct revenues. International experience also indicates that there are very few green-field projects where costs of breakwater, dredging, reclamation have been fully financed and developed by a private investor. Hence, substantial financial support from the government will be required for the project to make it financially viable, the DPR said.
One-time grant
“VGF provides a one-time grant to support projects with high capital expenditure, while a longer concession period allows developers more time to recoup their investment. A moratorium on royalty payments can ease initial financial burdens, enhancing project attractiveness and sustainability in the long term,” Jagannarayan Padmanabhan, Senior Director and Global Head of Transport, Logistics and Mobility, CRISIL, had earlier told businessline.
The VOC Port Authority retendered the request for proposal (RFP) after the earlier tender was cancelled due to poor response—only two (Vedanta and Premier Science and Technology) applied and both were disqualified. This time the eligibility criteria has been modified to enable larger participation. Details are awaited on the changes made in the second tender.
The project involves dredging and construction of breakwater on design, build, finance, operate and transfer basis with a total handling capacity of 4 million TEUs (twenty foot equivalent units) per annum in two stages.
The indicative project cost of the first stage of 2 million TEUs is ₹4494 crore and involves development of container terminal 1 (berths I and II), dredging and construction of breakwater and other common project facilities. The second stage (2 million TEUs) will cost ₹2,561 crore for developing container terminal-2 (berths III and to IV).
The concessionaire has to develop two container terminals of 1,000 m quay length each in the outer harbour. The construction period for Container Terminal -1 (Berths I and II) is 36 months and for Container Terminal -2 (Berths III and IV) is 24 months.
Rail connectivity
On rail connectivity, the port said it is in the process of planning the rail-road connectivity of the proposed project. The rail facility till the entrance of Outer Harbour Container Terminals will be provided by the Concessioning Authority. Concessionaire shall develop the railway facilities from the entrance of the outer harbour terminals.
