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Chennai Container Terminal Ltd (CCTL) has requested the Chennai Port Trust to hand over the idle iron ore terminal to convert it to a container terminal as agreed in the Concession Agreement signed in 2001.
The iron ore berth (BDII) located next to CCTL is idle for the last four years following a Supreme Court ban on ore export.
Largest terminal
If CCTL gets the iron ore berth, it will have the country’s longest container terminal of nearly 1.2 km with an annual handling capacity of around 1.20 million twenty foot equivalent units (TEUs). It currently has a terminal length of 885 m with an annual capacity to handle 1.06 million TEUs.
According to sources who did not want to be identified, the private terminal operator belonging to the Dubai Ports first asked the port to give 17 hectares of land contiguous to their yard in the iron ore berth to develop a container yard. In return, CCTL will return 22,350 sq m of land allotted to them to the port. Now, it wants the entire iron ore berth.
The licence agreement says that if the iron ore berth is converted into a container berth, it should be handed over to CCTL, which is obligated to accept and convert it in to a container berth. “We are ready to take over the iron ore berth,” said an official of CCTL.
The port trust has recognised the need for developing container capacity and is pursuing Jawahar Dock (JD) project to convert it into container terminal. There is a clear understanding that the Chennai port will handle only clean cargo and that the existing iron ore terminal will be shifted to Ennore port, the official said.
In the last 12 years, CCTL has invested around Rs 750 crore in the terminal. However, the terminal is constrained by limited backup yard space, which leads to congestion several times every year.
At the last ChPT board meeting, members felt that the port should consider looking at alternative cargoes to get higher revenue. They argued that CCTL will give the same royalty of 37.128 per cent as agreed in the concession agreement. However, if an alternative cargo is identified, it can fetch more revenue to the port.
Since the port trust is pursuing container terminal project at JD, handing over the iron ore berth to CCTL may not help the port in getting more revenue. The possible options with the port trust are to handle containers satisfying the provision of the concession agreement, liquid bulk and cars, sources said.
Pending issues
Sources said that giving the berth to CCTL may have to be examined only if the private operator agrees to all terms and conditions and withdraws its claims under pending disputes. This includes payment of licence fee as per Scale of Rates and annual escalation of 5 per cent on licence fee and shortfall on non-transhipment traffic.
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