Chennai port scraps Rs 3,700-cr container facility tender

The Chennai Port Trust, which manages the Chennai port, has decided to scrap the Rs 3,700-crore mega container terminal project tender as the final bidder, the Essar Group, has quoted a minimal revenue share in the project.

The port's management in a statement said since the final bidder offered a minimal revenue sharing, the board, at its meeting had decided to restructure the project and sounded caution that acceptance on the offer would lead to a norm for future projects across the country.

A senior port official and one of the board members said Essar quoted a meagre 5.5 per cent revenue share for the port's terminal project at a time when private operators at the port, DP World and PSA, have agreed to share 37.125 per cent and 45 per cent respectively from their revenue.

Post the failure to attract proper bidder, the board is known to have proposed developing the project in a phased manner, said the official.

The Essar group's decision to quote a low-revenue share might have come in view of the bleak economic scenario in the country and the excess port handling capacity in the region.

In 2010, the Union Cabinet gave its approval for the Rs 3,683-crore project, which will have a capacity to handle four million twenty-foot equivalent units per annum.

Of the total project cost, Chennai Port Trust's share will be Rs 561 crore, while the private partner, who will build, own and transfer the project, would invest Rs 3,125 crore.

The proposed investment includes Rs 963 crore towards breakwater, Rs 362.25 crore for dredging, Rs 496.80 crore to construct berths and Rs 124.20 crore for reclamation and other works.

The terminal is to be developed north of the existing Bharathi dock.

It will have two new breakwaters (total length 4.5 km) and a continuous quay length of 2 km, which will ultimately have 22-metre alongside depth to handle ultra-large container ships of over 15,000 twenty-foot equivalent unit capacity and 400 metres long.