PSA Container terminal exit at Thoothukudi’s VOC Port limits trade to single box facility

The premature exit of PSA container terminal from the VOC Port in Thoothukudi has left the trade with only box terminal at the port being operated by Dakshin Bharat Gateway Terminal Pvt Ltd (DBGT). PSA was India’s first foreign-invested container terminal and it was forced to exited the VOC port on March 1 after a long legal battle on royalty payment for container handling. The VOC Port Authority took over the terminal from PSA even as the 30-year concession period was to end only in 2028.

The DBGT is operating since 2014 with a full handling capacity of 0.72 million TEUs annually. In 2024-25, the port handled 7.95 lakh TEUs, 6.41 per cent growth over the previous year. DBGT is on revenue share agreement with the VOC Port Authority. Sources said that berth no 7 is now being used to handle all types of cargoes.

PSA Sical Terminals Ltd, a joint venture between Singapore’s PSA (earlier called Port of Singapore Authority) and the Chennai-based South India Corporation (Agencies) Ltd signed the concession agreement in 1998 and started operations in 1999.

During the license period, PSA Sical was required to share a per TEU royalty payment (increasing through the license period) with the Tuticorin Port Trust (now called VOC Port Authority), which was finalised as part of the initial bidding. The terminal’s annual capacity was to handle nearly 0.50 million twenty-foot equivalent units (TEUs) or twenty-feet containers.

However, nearly 9 years after the operations, the company found that royalty payable was higher than the tariff allowed to be charged. This was the start of a long battle, including legal, between the private operator and the landlord.

PSA was served a termination notice by the port authority for non-payment of royalty dues to the tune of ₹1,090 crore as on December 31, 2021. The notice was issued after the terminal operator lost an appeal in the Madras High Court. Multiple litigations were filed, and all of them were in favour of the port authority.

The PSA-Sical terminal dispute helped in bringing out some recent reforms like plans to migrate all terminals to market driven tariff, dispute resolution by Conciliation and Settlement Committee, which is becoming fairer, said an official having knowledge on the dispute.