The Hindu Business Line : Kochi container transhipment terminal — Dubai Ports scouting for local partners

It may seem to be a bit odd, but the Government's dogged pursuit to find a private operator to develop and run the proposed international container transhipment terminal (ICTT) at Kochi port has resulted in a Government company of a Gulf country emerging the highest bidder for the Rs 2,000-crore project.

Dubai Ports International (DPI), the international port management and consultancy unit of Dubai Government's Ports, Customs and Free Zone Corporation, is the highest bidder for the Kochi ICTT, quoting a revenue share of 33.3 per cent.

DPI is now scouting for local partners to develop and operate the terminal. "It has already sent out feelers and is in talks with a couple of leading Indian entities engaged in shipping, ports and related activities to become consortium partners in the project", trade sources said.

Though the company has bid for the project on its own, it can bring in local partners as consortium members in accordance with the terms and conditions of the bid.

As per the concession and licence agreement, DPI being the lead partner will have to hold a minimum equity of 51 per cent throughout the period it operates the existing Rajiv Gandhi Container Terminal (RGCT) and for the first ten years of operations of ICTT. It can dilute the remaining 49 per cent equity in favour of Indian partners.

The company needs local partners as part of its strategy to operate in India, where it is virtually unknown except for a small presence, holding an equity stake of 26 per cent in the special purpose vehicle operating the container terminal at Visakhapatnam port in partnership with United Liner Agencies of India Pvt. Ltd (ULA).

"By quoting a revenue share of 33.3 per cent, DPI has stunned critics who were sceptical of Cochin Port Trust getting a price bid of this level", a Government official remarked.

DPI is one of the short-listed bidders for the offshore container terminal project at Mumbai port, but Kochi would give them the chance to get a foothold in India in a big way straightaway given the size and magnitude of the project. "DPI's price bid indicates that it wanted to grab the project at any cost", the official said.

Trade sources said that the company has traversed a long way from being a reluctant investor in India to one that is bullish about the country's ports sector. "DPI's investment in the Vizag terminal project came about only because Dubai Government wanted to do business in Andhra Pradesh, which is run by a liberaliser like Chandrababu Naidu. It was a political decision. Otherwise, it was not too keen to invest in Vizag", the sources said.

Rivals may describe the company's bid as being "crazy" and "ridiculously high" for a greenfield project having low volumes, but it believes that there are good returns to be made from the ninth year onwards of operating the terminal.

"DPI has got the numbers right on this and is pretty comfortable with the revenue share quoted and the assumptions on which it was based. At the end of the day, it all depends on how you make it click", an official who was associated with DPI during the bidding process told Business Line.

"DPI has quoted a revenue share of 33.3 per cent being fully aware of the labour situation and the consequences of working in Kochi. It has its own strategy. This only goes to show the viability, feasibility and profitability of the project", the trade sources said.

Outside Dubai, the company has won six contracts including the management and operations of the South Container Terminal at Jeddah Islamic Port, management of the entire Djibouti Port and the management of the new Constantza South Container Terminal in Constantza, Romania.