India’s port privatization program suffered a serious setback when all major shortlisted bidders pulled out of a tender to build and operate the third container terminal at Chennai, the country’s second-largest box gateway.
Port sources said Mundra Port & Special Economic Zone, a domestic port developer, was the lone bidder for the 30-year contract as the tender process ended Sept. 30. The developer, owned by Ahmedabad-based Adani Group and operator of the Port of Mundra, offered a mere 1.5 percent revenue share as annual royalty to the landlord port.
Plans were approved by the central government in October last year and the new terminal was scheduled for completion in 2018. Now the project is likely to be seriously delayed if port management decides to turn down the sole bid and re-tender the contract.
Initial shortlisted bidders included DP World, Lanco Infratech, GVK-Leighton Consortium, L&T Transco, IL&FS Martime and Vadinar Oil Terminal. PSA International, which operates a terminal at Chennai, was barred from participating in the tender under government guidelines for public-private-partnerships.
The lack of interest reflected the growing concern among prospective bidders over the financial viability of the project given its high cost, currently estimated at $800 million, according to industry analysts Besides, the concession required the private operator to invest on construction of a 2.6 mile breakwater, land reclamation and other landside infrastructure.
The project calls for the construction of 6,562 feet of quay, draft of 59 meters with a provision to increase to 72 meters, and backup area of 247 hectares, with annual capacity of 4 million 20-foot equivalent container units.
Chennai Port, rattled by severe congestion since mid-July, currently has two terminals, including the Chennai Container Terminal operated by DP World, with a combined capacity of 2.2 million TEUs.