The Hindu Business Line : Kochi container terminal — Cabinet panel asks Dubai Ports to start work at the earliest

DUBAI Ports International will have to build and start operations at the proposed international container transhipment terminal (ICTT) at Vallarpadam in Cochin Port at the earliest without waiting for the traffic to reach the threshold level of 4,00,000 twenty-foot equivalent units (TEUs) at the Rajiv Gandhi Container Terminal (RGCT).

This was one of the conditions set by the Cabinet Committee on Economic Affairs (CCEA) on Wednesday while clearing the highest revenue share bid of 33.30 per cent quoted by DPI for developing and operating the Rs 2,118 crore project, the Union Shipping Minister, Mr T.R. Baalu, told Business Line. The Shipping Minister and the Finance Minister will now hold discussion with DPI on the timeframe within which it can start constructing the ICTT at the earliest.

DPI has already made its intentions clear about shifting operations to the ICTT within a span of three to four years given the constraints facing the RGCT.

``The CCEA has cleared the project. Now DPI will have to bring in the required investments at the earliest to construct the ICTT and start operations there,'' Mr Baalu revealed. Besides, CCEA has allowed DPI to stagger the upfront payment of Rs 35 crore over a period of five years in ten half yearly instalments of Rs 3.5 crore each along with an interest of 10 per cent. ``Though, the liability is upfront, it can be paid in instalments,'' he said.

Mr Baalu said that the CCEA clearance also involved an "in-principle" approval for providing rail/road connectivity and dredging for the project at an estimated cost of Rs 932 crore. This amount is expected to be provided by the Government as budgetary support to Cochin Port Trust.

To make the project viable, a minimum volume of container traffic is required at the port. For building up the threshold level of 4,00,000 TEUs, the existing berth at RGCT will be handed over to DPI for the initial period of operation subject to a maximum period of eight years and six months. Further, DPI will be allowed to run the ICTT for 30 years including a construction period of two years. Thus, the combined concession period (RGCT and ICTT) exceeds the 30 year limit set by the Cabinet in 1997.These were some of the terms on which Cochin Port Trust had invited financial bids from the short-listed bidders.

Since these conditions were deviations from the build, operate and transfer (BOT) guidelines for private sector participation in the major ports sector, the Shipping Ministry had taken the proposal to the CCEA for its approval.

After emerging the highest bidder, DPI has disclosed its plans to shift to the ICTT at the earliest in view of the impediments facing RGCT such as height restrictions imposed by the Navy on cranes and limitations in yard space for handling larger volumes.

``DPI must handle substantial volumes that is much more than the 1,69,965 TEUs handled by the RGCT during 2003-04. Only then, it becomes viable for DPI to build and operate ICTT given the huge investments involved particularly when they have to share 33.30 per cent of their gross revenues with the Port Trust,'' Government officials said.