The Hindu Business Line : Dubai Port keen on developing Vallarpadam box terminal soon

DUBAI Ports International (DPI) is keen to develop international container transhipment terminal (ICTT) at Vallarpadam in Kochi and shift operations there within four years irrespective of whether it handles the threshold level of 4,00,000 20-foot equivalent units (TEUs) for moving out of the Rajiv Gandhi Container Terminal (RGCT).

" For DPI, the project is Vallarpadam ICTT. There is no way they can make money in RGCT given the constraints facing the existing berth particularly when they have to share 33.30 per cent of their gross revenues with the Cochin Port Trust. So, within four years, they want to quit RGCT and move over to the ICTT," port trust officials said.

This is expected to dispel fears within a section of the Government, fed by views touted by rivals, that DPI may quit the project after operating the RGCT for 10 years by keeping the container throughput at the terminal a notch below the cut-off limit of 4,00,000 TEUs.

As per the terms of the contract, the successful bidder shall not be obliged to commence construction work of the ICTT until the traffic at RGCT reaches 4,00,000 TEUs. And, within two years of handling 4,00,000 TEUs, the terminal operator should shift operations to the ICTT and run the facility for the remaining part of the concession period of 30 years.

"For building up the threshold volume of traffic, RGCT will be handed over to the successful bidder for the initial period of operation subject to a maximum period of 8 years and six months", the official said.

But, if it is found on review during the eighth year of operations at RGCT that the operator has not been able to reach the cut-off limit of four lakh TEUs, rendering the development of the ICTT unviable, the concession and licence agreement will be terminated at the tenth year of operations.

Analysts tracking the project feels that the RGCT had lots of constraints such as a 414 metre quay length, the restriction imposed by the Navy to install cranes having a height of more than 45 metres (the modern post panamax cranes comes with a height ranging from 75 to 90 metres) and the limited yard space.

"Given this backdrop, even 4,00,000 TEUs is a killer to handle in RGCT. The more DPI sits on this terminal, the more they lose money as productivity and efficiency will be compromised. The sooner DPI builds the Vallarpadam ICTT and move out of RGCT, the better. Now, the onus will be on the port trust to provide the road and rail connectivity (estimated to cost Rs 932 crore) and facilitate the shift to ICTT", a senior analyst told Business Line.

The 20-member contingent of the Left Party MPs from Kerala is expected to seek early clearance of the project at the level of the Prime Minister and the Finance Minister. The issue is also likely to figure at the next Coordination Council meeting of the UPA Government.

A note for the Cabinet Committee on Economic Affairs (CCEA), approved by the Shipping Minister, Mr T.R. Baalu, is being circulated to various Ministries/departments concerned for their comments before submission to the Cabinet.

"The Shipping Ministry seeks to expedite the whole exercise of securing the CCEA approval for the Rs 2,118-crore project within a fortnight ", the official said.

DPI had emerged the successful bidder in a competitive bidding process in March by quoting the highest revenue share of 33.30 per cent for developing and operating the ICTT.

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