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P. Manoj

An agreement to develop a three-million-TEU capacity international container transhipment terminal (ICTT) at Vallarpadam in Kochi Port will be signed between the successful bidder, Dubai Ports International, and the Cochin Port Trust on February 7, even as the latter logged a record throughput for this fiscal so far. — H. Vibhu

THE concession and licence agreement for developing a three-million-TEU capacity international container transhipment terminal (ICTT) at Vallarpadam in Kochi Port will be signed between the successful bidder, Dubai Ports International (DPI), and the Cochin Port Trust, in Thiruvananthapuram on February 7 in the presence of the Kerala Chief Minister, Mr Oommen Chandy, and the Union Minister for Shipping, Road Transport and Highways, Mr T. R. Baalu.

"We need the full support of the State government for implementing the project. That is why we decided to sign the deal in Thiruvananthapuram in the presence of the Chief Minister," a senior Ministry official said.

DPI, the investment arm of the state-owned Dubai Ports Authority, had emerged the successful bidder for developing and operating the project on BOT basis for 30 years by quoting the highest revenue share of 33.30 per cent to the Port Trust.

The Cabinet Committee on Economic Affairs (CCEA) had earlier this month approved the revised draft licence agreement for the Rs 2,118-crore project. The ICTT will be implemented through a Special Purpose Vehicle, India Gateway Terminal Private Ltd, a 100 per cent subsidiary of DPI to start with.

Subsequently, DPI plans to rope in other shareholders into the SPV by diluting its stake. However, DPI is stipulated to retain a minimum of 51 per cent equity in the terminal operating company. DPI has already decided to induct a local entity, Chakiat Agencies Private Ltd, which will hold a small stake in the SPV.

As per the plans, the Government will first hand over the existing Rajiv Gandhi Container Terminal (RGCT) at the port to DPI for handling container cargo. And, within four years of starting operations at RGCT, DPI will have to construct and shift operations to the ICTT, irrespective of the traffic volumes.

Though DPI will transfer RGCT back to the Port Trust after it commences operations its ICTT, the Government has undertaken not to set up a competing facility for some more time to provide comfort to the investor.

DPI will have complete monopoly over container cargo handling at the Kochi Port until it handles 2.5 million TEUs at the ICTT. "DPI will have full right to handle containers at the port till traffic volumes touch 2.5 million TEUs. Till such time, the Port Trust cannot set up a parallel, competing facility," the Ministry official said.

Though the Government has not fixed a target for DPI to handle transhipment cargo directly at the port, the operator will have to handle one million TEUs (under certain conditions) within ten years of shifting operations to the ICTT.

"Otherwise, DPI will have to explain the reasons for not handling container cargo to the extent agreed upon in the licence agreement," the official said.

Yet another significant feature of the proposal is that the CCEA has given an in-principle approval to provide rail/road connectivity and deepening of the port channel to accommodate large main line vessels of up to 8,000 TEUs at the container terminal at a total estimated cost of Rs 843 crore.

"The CCEA has said that at the appropriate time, agencies such as the NHAI, Railways and the Port Trust can approach the competent authority to obtain the necessary approvals in this regard," the official said.

In accordance with the existing policy, DPI will have to take over the 352 workers employed at the RGCT while assuming operations there.

Till such time, RGCT is operated by DPI, all the 352 workers will function under DPI.

"The workers are on deputation to DPI, keeping a lien with the Port Trust. It is a temporary arrangement," the official explained.

The workers will have the option to continue with DPI (provided the operator is willing to absorb the workforce) or return to the Port Trust fold once the ICTT commences operations.

The Government reckons that about 100 of these workers will retire on reaching superannuation by the time the ICTT is ready to start functioning.

"If the DPI does not absorb the balance 250-odd workers or if the workers chose to exercise the lien and return, the Port Trust can easily accommodate them and provide alternate sources of employment," the official stated.

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