The Hindu Business Line : PSA-Sical barred from bidding for Tuticorin new box terminal

New Delhi/Chennai, May 25 For developing the 8th berth in Tuticorin port as a container terminal, the Shipping Ministry has decided against allowing the existing container terminal operator, PSA-Sical Terminals Ltd, to participate in the financial bidding process.

The new container terminal will be developed at an estimated cost of Rs 312.26 crore on a design, build, finance, operate, transfer basis. It will create an additional container handling capacity of six lakh twenty foot equivalent units (TEUs).

Four bidders

The bidding process for the container terminal is currently on. The financial bids have been invited from four bidders that include Larsen and Toubro, Afcons and the Chennai-based Chettinad Group.

“A final view has been taken on the matter. We have decided against allowing the existing operator to bid for the new container terminal,” an official source told Business Line.

This principle is usually applied to discourage monopolistic practices and promote competition in the port.

Operated by SPV

The existing container terminal in Tuticorin port is operated by a special purpose vehicle (SPV) owned by PSA and Sical Logistics.

The norm of not allowing the existing terminal operator to bid for another expansion project was followed for the second container terminal development of Chennai port as well.

“In Chennai port’s case, DP World Chennai (which is the existing container terminal operator) was not allowed to bid for the second container terminal.

Eventually, the consortium of PSA and Sical won the bid for the project,” said a source.

Standard policy

The Government now has a standard policy on setting up competing facilities, but when it comes to allowing terminal operators to bid, the decision is usually taken on a case-by-case basis.

In the new concession agreement, a policy on competing facility says that the port shall not operationalise any additional facility within port limits for handling until five years from the scheduled project completion date; or if the average annual volume of cargo handled at the project facilities and services reaches a level of 75 per cent of project capacity for two consecutive years (whichever is earlier).

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