Posted on November 9, 2026
By P Manoj
Adani Ports and Special Economic Zone Ltd (APSEZ), Megha Engineering and Infrastructures Ltd and Vishwa Samudra Engineering Pvt Ltd are in the race for a ₹11,733.28 crore contract to construct breakwater, dredging, and reclamation on Hybrid Annuity Mode (HAM) for the ambitious container terminal project in the outer harbour of V O Chidambaranar (VOC) Port.
This is the second such instance of a state-owned port authority using the HAM model to implement basic civil infrastructure works after the planned Vadhvan port in Maharashtra.
VOC Port Authority is making a renewed attempt to get the project off the ground after two earlier rounds failed.
Through an amendment to the tender terms, VOC Port Authority removed the eligibility clause relating to dredging and reclamation and instead brought in breakwater construction experience in India as a qualification criterion.
The amendment allowed a bidder or any of its consortium members that have executed / completed the construction of breakwater for a minimum length of 2 km over a period of five years ending on the bid due date, from a single eligible project, to participate in the tender.
By tweaking a key qualification criterion for bidders, VOC Port Authority Chairman S K Purohit has sought to break the dominance of European dredging companies for contracts in India.
Adani Ports and Special Economic Zone Ltd will qualify for the tender based on the experience of constructing a 2.96 km-long breakwater for Vizhinjam port in the last five years.
Megha Engineering and Infrastructures will be eligible for the work on the basis of the 2.325 km-long breakwater it constructed for the upcoming port at Machilipatnam in Andhra Pradesh.
Vishwa Samudra Engineering is constructing a 3.435 km-long breakwater for a new port at Mulapeta in Andhra Pradesh, which is nearing completion.
Under the earlier plan, the outer harbour container terminal project was to be implemented in PPP mode with viability gap funding (VGF) support of ₹1,950 crore at an estimated cost of ₹7,055.95 crore (excluding GST). The terminal was planned to handle vessels of up to 18,000 twenty-foot equivalent units (TEUs) with a draft of 16 metres.
Prime Minister Narendra Modi laid the foundation stone for the project on February 28, 2024.
Subsequently, the port authority made two unsuccessful attempts to implement the project. In the first attempt, only two bidders submitted proposals, but neither met the qualification criteria. In the second attempt, no bids were received at all.
Following stakeholder consultations and armed with a revised DPR prepared by a new consultant, the port authority decided to restructure the project in two parts by adopting the Hybrid Annuity Mode (HAM) for basic civil infrastructure components such as breakwaters, dredging, and reclamation at a cost of ₹11,733.28 crore and Design, Built, Finance, Operate and Transfer (DBFOT) framework for mechanization and operation of container terminals, including yard infrastructure and equipment entailing an investment of ₹5,434.09 crore.
“This dual approach is intended to balance risk-sharing, attract private participation, and ensure operational efficiency,” the port authority stated.
The restructured project was approved by the Public-Private-Partnership Appraisal Committee (PPPAC) on April 23.
While the earlier proposal catered to vessels with a draft of 16 metres having a maximum carrying capacity of 18,000 TEUs, the restructured plan has been designed to accommodate vessels with an 18-metre draft, capable of carrying up to 24,000 TEUs.
The enhancement of capacity has significantly altered the scope of dredging requirements with the dredging quantity increasing from 10.96 million cubic metres to 20.30 million cubic metres, owing to the deeper basin and channel, as well as the extension of the outer channel length from 8.6 km to 10.5 km and its width from 230 metres to 295 metres.
“The decision to adopt an 18-metre draft was based on recent traffic forecasts and prevailing market demand, ensuring that the outer harbour was future-ready and competitive. However, the increase in dredging volume has naturally escalated costs,” the port authority told the PPPAC. Accordingly, the revised total project cost (TPC) after cost escalation for both HAM and DBFOT components has risen to ₹17,167.36 crore, more than double the earlier estimates of ₹8,326.02 crore (including GST).
The increase in draft from 16 metres to 18 metres will enable the port to handle larger mainline vessels, including next generation container ships, thereby improving its competitiveness, enhancing economies of scale, and positioning it as a viable transshipment and gateway hub, according to the port authority.
“The enhancement in dredging scope is aligned with the objective of significantly augmenting the capacity and operational capability of the port. Post implementation, the outer harbour is envisaged to achieve a capacity of approximately 5.2 million TEUs,” it pointed out.
The total capacity per the earlier proposal was 4 million TEUs with 2 million TEUs for each terminal.
In the restructured plan cleared by PPPAC, the total capacity has been assessed as 5.2 million TEUs: 2.6 million TEUs for each terminal.
The total additional royalty and other revenue (rail siding revenue, miscellaneous cargo revenue and vessel related revenue) accruing to the port authority by such increase in capacity is around ₹43,000 crore over a 20-year period beginning 2041 and till 2060.
To address bidder concerns and enhance overall project attractiveness and bankability, the port authority said the core marine infrastructure components such as dredging, reclamation, and breakwater construction are proposed to be undertaken on the HAM model, thereby shifting a significant portion of construction and financing risk to the port authority.
The container terminals will be developed on the DBFOT framework, enabling private participation in revenue-generating operational components.
In addition, certain technical and design modifications, including increase in dredging depths, and extension of the outer channel length, have been incorporated to improve the overall viability, scalability, and attractiveness of the project to prospective bidders, it said.
For the HAM component comprising four years of construction and 10 years of operation and maintenance, 45 per cent of the bid project cost apportioned to the respective phase, adjusted for the price index multiple, will be paid to the concessionaire in 10 equal installments of 4.5 per cent each during the construction period of the respective phase.
The balance project cost will have to be arranged by the concessionaire through debt and equity. This will be repaid in twenty biannual installments commencing from the 180th day of completion of the work of respective phases.
The HAM component of the project will be funded by the port authority through its internal resources and reserves. “No immediate reliance on external budgetary support is envisaged at this stage,” the port authority informed PPPAC.
During the operation and maintenance period, the HAM concessionaire will not be permitted to collect any charges / fee from the users.
The container terminal operators will be allowed to fix and collect charges from the users based on market conditions during a concession period spanning 30 years including two years for construction of berths.
