The Chennai Port Trust has cancelled a global tender to build and operate its long-planned container terminal project, dealing a serious blow to India’s port privatization program.
The decision was made by the CPT board last week after all seven pre-qualified bidders failed to respond to the port’s request for proposals by the submission deadline of June 26. The project, on a 30-year operating concession, was estimated to cost Rs. 3,686 crore (about $615 million).
“The tender has been withdrawn, but we are not scrapping our plans. We will look at restructuring the project,” a port official said.
An official announcement is expected shortly.
The port had been working since 2008 to woo a private operator to invest in the build-operate-transfer project, which was designed to handle 4 million 20-foot-equivalent units a year when fully developed. The first attempt in 2010 fell through after all shortlisted organizations, which included DP World, Essar Group, Adani Ports, Lanco Infratech, GVK-Leighton Consortium, L&T Transco and IL&FS Maritime, stepped away from the final phase of the process. The second attempt began in September 2011 and drew two final proposals, one from Essar Group with a mere 5.25 percent revenue share offer, which was rejected by the CPT board, and the other from Adani Ports, which was not considered because of security clearance issues.
Industry observers attribute the lack of interest from investors to landside infrastructure bottlenecks at the port, mainly congested access roads, and the ongoing slowdown in the container shipping market, which has seen volumes at major Indian ports fall by 4.56 percent year-over-year in the first two months (April-May) of fiscal year 2013-14.
The Chennai terminal bid collapse comes as New Delhi announced plans to award 30 port development contracts, worth Rs. 24,633 crore (approximately $4.15 bilion), in fiscal 2013-14 aimed at expanding total port capacity by 288 million tons a year.