Adani Port gets nod from Ennore Port board to build contianer terminal

The Board of Ennore Port Ltd (EPL) today gave its nod for Adani Ports & Special Economic Zone to build a Rs 1,270 crore container terminal at Ennore Port, around 45 kms from Chennai.

The project will not come under Tariff Regulator for major ports Tariff Authority for Major Ports (TAMP), since the port is not a major port.

Adani Ports emerged as the highest bidder to build a container terminal, compared to DP World which was the runner. Third company, Singapore Port Authority did not participate in the final financial bid.

A senior official from the Port has confirmed the development and said that the Board gave its nod for Adani Ports proposal at the Board meeting held today. Letter of Award will be issued to the company in the coming weeks.

Adani offered a revenue share of 37 per cent beating DP World, which offered 27 per cent. The official said totally 11 companies have shown interest in the technical bid, however only three companies came to financial bid. Adnai officials were not available for comment immediately.

It is interesting to note since Ennore Port is not a major port it will not come under Tariff Authority for Major Ports (TAMP), it means Adani will have a free hand to determine the port handling charges based on the market conditions, noted a senior official from the industry.

Industry experts added, the company can give offer and discount to anyone and had this happened about 3-4 years before the landscape of Chennai Port would have been different. He noted, Chennai Port is unable to get lucrative offers for its proposed third and mega container terminal, but Ennore could succeed attracting company, which is ready to give 37 per cent of its revenue.

Earlier EPL invited fresh bids after Eredene Capital PLC, a UK based infrastructure fund has withdrawn from the Ennore Port container terminal project. That time the company said, “the concession awarding body, Ennore Port Limited, 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,” the fund said in the statement.

Bay of Bengal Gateway is a special purpose vehicle (SPV) company formed for the project with members being Grup Maritim TCB, S.L., Spain; Obrascon Huarte Lain, S.A., Spain; Lanco Infratech Ltd and Eredene Capital PLC, UK/India, which has a 22 per cent share-holding in BoB.

Last year, again Ennore Port as called for a Bid and at the final stage, Singapore Port Authority withdrawn from the bid, said the official who don't want to be identified. Of the total cost, Ennore Port will invest around Rs 200 crore in dredging the Berth and to create connectivity.

Ennore Port Ltd's, India's first corporate port set up the Ministry of Shipping, called for a bid to set up a 1.40 million twenty-foot equivalent units capacity and expected to be ready in the next three years. EPL's Board is expected to meet this month to give approval formally for Adani's bid.

The company has got security clearance also, said the official. It may be noted, this will be the first container terminal project in the East court for the Gujarat-based $8.7 billion Adani group.