Vizag port to award terminal expansion project to VCTPL

The Visakhapatnam port has finally agreed to award the Rs 820-crore container berth expansion project to Visakha Container Terminal Private Limited (VCTPL). It is a design, build, finance, operate and transfer (DBFOT) public private partnership (PPP) project.

Promoted by Dubai Ports World and United Liner Agencies of India, VCTPL, is currently operating the container terminal at Visakhapatnam port.

The expansion project would help the port handle 1.05 million container boxes from the existing 0.5 million. The project works include construction of a berth, erection of higher capacity cranes, handling equipment and reclamation of more than 100 acres, and is expected to be completed in the next three to four years.

The port is expected to handle more than 270,000 containers this fiscal, up from 80,000 containers it handled in 2008-09.

Keeping in mind the growth potential, the Vizag port a year ago had called in for global tenders for the berth expansion project under the PPP. Companies including VCTPL, Adani port, Navayuga Engineering, Gangavaram port had shown interest in the project, but only VCTPL came forward to submit the financial bids.

The final award for the project has been delayed due to the low gross revenue share quoted by VCTPL. However, after the negotiations on December 26, VCTPL has agreed to enhance the revenue sharing from 10.044 per cent to 11.044 per cent.

Earlier, Vizag Port appointed Rail India Technical and Economic Services (Rites) to study the revenue sharing issue. While the Rites recommended a 20-25 cent share for it from the gross revenue, the Indian Ports Association (IPA) has suggested a minimum 15.5 per cent share.

However, the port has agreed to go for 11.044 per cent share proposed CTPL as the final cost estimates of the project rose to Rs 820 crore from the initial Rs 633.11 crore. This was due to rupee depreciation against the US dollar, diesel, power costs coupled with presumed higher capacities, low tariffs, traffic uncertainty, project viability, said VCTPL sources.