India’s port privatization program suffered yet another setback Thursday when a consortium that had won concessions to build and operate a new container terminal at the southeastern Port of Ennore near Chennai pulled its bid, citing cost escalation and depressed market conditions.
“The concession awarding body, Ennore Port Ltd., has been informed of this decision, which was taken in light of the changed economic outlook in India since the concession was granted -- the increased cost of local financing, depreciation of the Indian Rupee and lower projected growth in container traffic,” said U.K.-based Eredene Capital, a 22 percent stakeholder in the project.
The consortium, which had set up a special purpose vehicle called Bay of Bengal Gateway Terminal to handle the project, included Grup Maritim TCB of Spain and Lanco Infratech, a domestic construction group.
The consortium was awarded a 30-year concession for the project in August 2010 and the new terminal, Ennore’s first container-handling facility, was scheduled for completion in 2014. Plans called for the construction of 3,280 feet of quay and draft of 49 feet, with an annual capacity of 1.5 million 20-foot-equivalent units.
The Ennore terminal, which is designed to simultaneously handle three 8,000-TEU ships, was expected to take traffic away from Chennai Port, which has been struggling through a slew of infrastructure issues.
Ennore, one of India’s 12 major state-owned ports, currently handles bulk ships with drafts up to 52 feet. Cargo volume for fiscal 2011-12, which ended March 31, was estimated at 15 million tons, up from 11 million tons a year ago.
The collapse of the Ennore contract follows the recent cancellation of a $1.5 billion bid awarded to Singapore’s PSA International for construction of a fourth container terminal at the Port of Nhava Sheva (Jawaharlal Nehru), the country's top container handler.