State-owned V O Chidambaranar Port Authority on Saturday signed a concession agreement with Tuticorin International Container Terminal Pvt Ltd for converting the dry bulk cargo Berth No 9 at the eastern coast port into a container terminal with private funds.
Tuticorin International Container Terminal, a wholly owned unt of J M Baxi Ports & Logistics Ltd, had emerged the successful bidder on the tender by placing the highest royalty price bid of Rs 1,900.44 per twenty-foot container unit (TEU) when the price bids were opened on 4 August.
The concession agreement was signed after the Madurai Bench of the Madras High Court earlier this week vacated the “status quo” on processing the tender on a petition brought by an entity that was disqualified by the port authority, port officials told ET Infra.
A concession agreement sets out the terms and conditions of a port contract and puts the project in motion.
This is the second contract success in recent months for J M Baxi Ports & Logistics after it triumphed in a tender issued by Jawaharlal Nehru Port Authority (JNPA) to privatise the container handling terminal self-run by the State-owned port located near Mumbai. The concession agreement for this terminal was signed on 29 July.
The contract wins will boost the valuation of J M Baxi Ports & Logistics ahead of a planned initial public offering (IPO) of shares.
Port tenders at major ports (owned by the Centre) are decided on the basis of royalty per TEU: the entity willing to share the highest royalty per TEU with the port authority wins the deal for 30 years.
The royalty payable will rise annually in tandem with the increase in wholesale price index (WPI), a measure of costs. The terminal operator will be free to set market rates under the new Major Port Authorities Act and the model concession agreement (MCA).
J M Baxi Ports & Logistics runs container terminals at Visakhapatnam port, Deendayal Port (Kandla), Haldia Dock Complex, a multiple purpose terminal at Paradip Port, container freight stations, inland container depots, bulk logistics, rail logistics (container trains), cold chain logistics and heavy project logistics.
In FY22, J M Baxi Ports & Logistics handled about 1.6 million TEUs and about 15 million tonnes (mt) of cargo, across its facilities located on India’s western and eastern coasts.
The privatisation of Berth No 9 into a container terminal (depth of 14.2 metres) with an investment of Rs 434.17 crore will boost VOC Port’s container handling capacity by 6 lakh twenty-foot equivalent units (TEUs) a year to 1.8 million TEUs a year.
VOC Port, the third largest container handler among the dozen State-owned ports, currently has two container terminals in its inner harbour, run separately by PSA SICAL Terminals Ltd (draft of 11.7 metres) and Dakshin Bharat Gateway Terminal Pvt Ltd (draft of 14.2 metres) with a capacity to handle a combined 1.2 million TEUs. The average capacity utilization of the two terminals is about 65 percent.
The two terminals handled a combined 7,81,458 TEUs or 15.4 million tonnes (mt) in FY22 compared to 7,62,000 TEUs in FY21.
Container cargo accounted for some 45 percent of V O C Port’s total cargo of 34.12 million tonnes (mt) in FY22.
J M Baxi Ports & Logistics pipped D P World Ltd, the global port operator owned by the Dubai government which quoted about Rs900 per TEU, and JSW Infrastructure Ltd (around Rs650 a TEU) to become the successful bidder on the tender.
The project is a part of the National Monetisation Pipeline (NMP) wherein operational infrastructure assets including port terminals will be privatised through the public-private-partnership (PPP) route. The NMP has listed 31 cargo berths across nine of the 12 major ports for privatisation by 2025.
