Source: ET Infra
Adani Ports and Special Economic Zone Ltd (APSEZ), Singapore’s PSA International Pte Ltd, JSW Infrastructure Ltd and J M Baxi Ports and Logistics Ltd were among the four port operators that participated in a pre-bid meeting called by V O Chidambaranar Port Authority on Friday to build a 4 million twenty-foot equivalent units (TEUs) capacity container terminal in the port’s outer harbour with an investment of Rs7,055.95 crores.
Dutch dredging contractor Van Oord India Pvt Ltd and International Seaport Dredging Pvt Ltd, a part of Belgium’s DEME Group, also participated in the pre-bid meeting as the project has a dredging component of Rs1,420.62 crores (spread over two phases).
The pre-bid meeting was also attended by Mohan Muthu, a local rock supplier because the project has a 5.535 km breakwater construction component of Rs698.45 crores that requires rock.
The lukewarm interest from potential port operators for the pre-bid meeting on the mega project that is designed to act as a gateway as well as a transhipment facility stems from concerns over what they cite as “unrealistic” cost estimates worked out by the VOC Port Authority with the help of the National Technology Centre for Ports, Waterways and Coasts (NTCPWC) under the Indian Institute of Technology Madras (IITM) on dredging and breakwater construction.
Some of the potential bidders who participated in a road show held by the VOC Port Authority on 18 March in Mumbai felt that the project cost estimated by the state-owned port authority in a global tender was lower by “at least 50 percent”, which would make it difficult for the bidders to place a price bid and expose them to risks later.
Hence, potential bidders had urged the port authority to “re-visit” the cost estimates or else to raise the viability gap funding to 50 percent of the project cost to make it attractive.
The port authority has sought bids based on the lowest viability gap funding (VGF) quoted by bidders for developing the project, marking a departure from the model followed so far by the Union government owned major ports wherein cargo handling contracts are finalised on the basis of the highest royalty per twenty-foot equivalent unit (TEU) or per ton of cargo quoted by the bidders.
“The VGF shall constitute the sole criteria for evaluation of bids: The project shall be awarded to the bidder quoting the lowest VGF,” the port authority wrote in the tender documents.
The VGF has been capped at Rs1,950 crores or actual quote, whichever is lower.
With the Cabinet clearing the project in the last week of February, re-working the cost estimates looks unlikely.
T K Ramachandran, Secretary, Ministry of Ports, Shipping and Waterways who was instrumental in pushing the much-delayed project during his time as Chairman of VOC Port Authority, assured potential developers during the Mumbai road show that the government has “built in necessary provisions in the sanction orders which enables us to be more flexible” to make the project work.
“So, if the sum total of all the industry representatives’ opinion is that this (the tender terms) needs change, and due to that we have a problem in getting the bids that we expected, then we’ll go back to the drawing board. There is no hesitation in doing that, we have given that authority to go back to the drawing board and look at what can be changed but for that we need one cycle to go through,” he stated.
