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VOC Port: Potential Bidders Express Concerns Over Cost Estimates Of Rs 7,200 Crore Mega Transshipment Hub Project

The port has recorded consistent growth in container traffic in recent years

Posted on April 3, 2024

In a pre-bid meeting held by V O Chidambaranar Port Authority, Adani Ports, PSA International, JSW Infrastructure, and J M Baxi Ports showed interest in constructing a four million TEUs capacity container terminal in the port’s outer harbour, with investments totalling Rs7,055.95 crores. However, concerns over “unrealistic” cost estimates dampened enthusiasm.

Dutch dredging contractor Van Oord India and International Seaport Dredging Pvt Ltd joined the meeting, highlighting the project’s dredging component of Rs 1,420.62 crores and the need for rock supply worth Rs 698.45 crores. Participants cited discrepancies in the cost estimates, expressing doubts about the project’s viability.

Potential bidders raised concerns about the low project cost estimate, urging the port authority to reconsider or increase the viability gap funding to 50 per cent.

Despite requests for re-evaluation, the port authority has decided to base the project award solely on the lowest viability gap funding quoted by bidders, capped at Rs1,950 crores.

With the Cabinet’s recent approval of the project, revising cost estimates seems unlikely. T K Ramachandran, Secretary of Ministry of Ports, Shipping and Waterways, assured flexibility but emphasised the need for constructive feedback. He stated that while adjustments are possible, unrealistic demands may not be met, as per an Economic Times report.

The project awaits further developments as stakeholders navigate challenges in realising this ambitious project.

The project is strategically positioned to leverage the burgeoning investor enthusiasm in the region, driven by landmark investments such as the Rs 16,000 crore electric vehicle manufacturing unit initiated by Vietnamese conglomerate VinFast.

Additionally, the upcoming establishment of the Indian Space Research Organisation’s second spaceport in Tamil Nadu’s Kulasekarapattinam and Singapore-based Sembcorp’s staggering Rs 36,238 crore project have further enhanced the region’s allure for investors.

V O Chidambaranar Port

V O Chidambaranar Port, strategically close to the east-west international sea routes on the southeastern coast, is one of the 12 major ports in India and the second-largest in Tamil Nadu.

The VOCP was declared a major port by the government of India in July 1974.

The port is an artificial harbour protected by two breakwaters and is connected to deep water by a dredged channel. The port has a handling capacity of around 70 million tonnes per annum (MTPA) with 16 berths, including two container berths.

The port handles major cargoes such as coal, copper concentrate, timber logs, phosphoric acid, rock phosphate, granite stone, salt, wheat sugar, construction materials, pulses, VCM, LPG naphtha, furnace oil, ammonia fertiliser, etc.

The port has recorded consistent growth in container traffic in recent years.

In the last four years, 2017-18, 2018-19, 2019-20 and 2020-21, VOCPA handled container traffic of 6.92 lakhs TEUs, 7.39 lakhs TEUs, 8.04 lakhs TEUs and 7.62 lakhs TEUs respectively.


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