The office of the Vizhinjam International Seaport Ltd, a special purpose vehicle set up by the Kerala Government for implementing the Rs 6,595-crore international deepwater multi-purpose port and transhipment container terminal to the south of Thiruvananthapuram, is abuzz with activity.
A massive greenfield project that has a lot of prestige attached with it locally, Vizhinjam is being developed based on the landlord port model in which the Government sets up the port infrastructure. At one stroke, the model precludes the private partner the bother of developing the port infrastructure that requires huge investment. The private developer now stands to receive a ready platform on which it needs only build the port superstructure.
Project advisor International Finance Corporation (IFC) is currently evaluating the single bid making the grade for selection of the port operator. The evaluation report will be put to the Empowered Committee under the chairmanship of the Chief Secretary, Government of Kerala. Vizhinjam International is expecting to receive the evaluation report soon.
So, it is now for the State Cabinet to weigh the pros and cons and decide on the acceptability of the bid, especially after the bidder has made a request for a grant of Rs 479.54 crore during the first 16 years of operation.
The concession period for the bid is 30 years and the revised estimated cost of the project is Rs 4,010 crore for the first of three development phases, of which the port operator is envisaged to bring in Rs 970 crore.
NOT AFFECTED
Vizhinjam International is least affected by misgivings that critics have flagged about the lone bidder, a consortium led by Welspun Infratech, having made it to the final stage when financial bids were opened last week. Not even when told that the bidder had requested the grant of Rs 479.54 crore from the Government of Kerala.
Mr A.S. Suresh Babu, Managing Director and Chief Executive Officer of Vizhinjam International, explained to Business Line that the lone bidder's request was for an operational grant to finance the overheads during the first 16 years. The State Government, in consultation with the project advisors, the Empowered Committee and the State Law department would arrive at a decision on the desirability of accepting the bid offer.
If it decides to go ahead with the project, Vizhinjam International would escalate the ongoing background work with respect to the environmental impact assessment (EIA) study, connectivity issues, funding, drawing up the project master plan and pre-qualification bid for the engineering, procurement and construction (EPC) for the contractor who will lay down the port infrastructure on behalf of the company.
GAINFUL USE
Instead, it would go ahead with the EIA study and launch of the EPC bid, which have been concurrently taken up along with the process leading up to opening of the financial bid, Mr Suresh Babu said. The aim would be to set up the port infrastructure and look for options of putting it to gainful use, something the Government of the day would decide.
Mr Suresh Babu was not seeking to shoot in the dark either. The EIA, as and when it gets completed (Vizhinjam International expects to finalise it by July and submit it to the Centre), and a ready port infrastructure would combine to make a compelling proposition for any developer with a serious intent to commit purposeful investor money in the future.
He described the EIA being conducted as one the most elaborate ever, which by itself would be a major takeaway for private developers intending to invest in a multi-purpose deepwater project that boasts some of the finest attributes in terms of accessibility to the busy east-west shipping route, a deep natural draft and near-tranquil seas.
Unlike in the case of project sites of comparable investments in Kudankulam, Jaitapur and Singur, Vizhinjam has had a stroll in the park with respect to requirement of land for development. According to techno-commercial feasibility studies done by L&T Ramboll in 2004 and later by Royal Haskoning in 2010, the entire project is proposed to be constructed on reclaimed land. But acquisition to the extent of 120 hectares is required for setting up external facilities and the same is under rapid progress, Mr Suresh Babu said. This is part of the job to be executed by the EPC contractor.
Work on the approach road is over, and that on the back-up would be completed by March. The Kerala State Electricity Board has started work on fetching the power needed during the construction and operation phases. The Kerala Water Authority has finalised the tender for water supply and the same has been forwarded to the State Government for approval.