India’s Chennai Port Authority plans to seek fresh proposals from all seven pre-qualified bidders for the construction of its long-planned third container terminal, currently estimated to cost Rs. 3,686 crore (approximately $682 million).
The moves follows a decision by the CPA board of trustees that lone final bidder Vadinar Terminal-Essar Port Consortium had not offered a reasonable share of revenue as annual royalty for a 30-year operating concession. An official announcement is expected shortly.
Port sources said the domestic group had offered a revenue share of 5.25 percent from the proposed facility, which is being designed to provide an annual capacity of 4 million 20-foot-equivalent units when fully operational. “The bidder did not agree to our request for a hike in the royalty payment,” a port official said.
DP World, Adani Ports and Special Economic Zone, Lanco Infratech, GVK-Leighton Consortium, L&T Transco and IL&FS Maritime were the other organizations that made the initial short list. Ahmedabad-based Adani Group was in the second phase of the process, but its bid was not considered by the port authority because of security clearance issues.
Plans for the “Chennai mega terminal” were approved by the federal government in October 2010, and the deep-draft facility originally was slated for completion in 2018. The new process is likely to cause further delay and uncertainty.
Chennai is India’s second-largest container gateway, with a throughput capacity of 2.2 million TEUs. The port handled 1.54 million TEUs in fiscal year 2012-13, which ended March 31, 2013, down from 1.56 million TEUs in 2011-12.