Kerala government calls bids for Vizhinjam port

Kerala government-controlled Vizhinjam Port has invited request for qualification bids from 31 companies that had earlier submitted expressions of interest for operating the proposed port. The companies include domestic shipping companies like Shipping Corporation and Essar Shipping, besides port companies like Mundra Port, APM Terminal and Port of Barcelona.

The port is expected to start operations by the end of 2014.

Companies operating ports in Amsterdam, Macau, Marseille and Lisbon have also shown interest. The companies will be shortlisted in the middle of January.

Bidding for the port had been cancelled twice earlier. In the first instance, a Chinese consortium was not allowed due to security reasons despite being selected. In the second case, Lanco won the bid but fresh ones were called after one of the parties contested it.

International Finance Corporation is the lead transaction advisor to Vizhinjam International Seaport Ltd (VISL) for the current bidding round.

“We have taken steps to make the selection process as objective as possible, which will leave no scope for different interpretations. It is a great investment opportunity as international shipping routes like Europe, Persian Gulf and Far East are within 10 nautical miles of the port,” said VISL MD and CEO Sanjeev Kaushik, who is also the secretary (ports), Kerala.

One nautical mile is equal to about 1.85 km.

The first phase of the project would cost Rs 2,500 crore out of which Rs 1,000 crore would be spent by the port operator for making the super structure, etc., and the remaining will be provided by the government for engineering, procurement and construction (EPC). The government is raising this money through a consortium of banks led by State Bank of Travancore.

The port is being planned as a transshipment hub, besides being a multipurpose cargo facility. The state government has also applied for a relaxation in cabotage law — rules governing marine transportation — to the Centre to carry on with the transshipment activity.

Close to Vizhinjam, the central government-owned Kochi Port is also coming up with the International Container Transshipment Terminal, which is being developed as the country’s first transhipment hub.

“Due to the deep draft available at the port here, the Panamax vessels can easily dock at Vizhinjam while at the ICTT it is very difficult,” said Kaushik. Vizhinjam Port boasts of having the deepest natural draft among all ports in India with water depth of 18-22 metres, which does not require maintenance or capital dredging.

Based on estimates from Drewry Shipping Consultants of the UK, container volumes at Vizhinjam Port are expected to reach 822,000 TEUs (twenty-foot equivalent units) by the end of Phase 1 in 2020; 1.76 million TEUs by the end of Phase 2 in 2030; and 2.82 million TEUs by the end of Phase 3 in 2044.

The Kerela government is also going to acquire about 300 acre of land for the development of rail and road connectivity for the port before the bids are invited.