The VOC Port Authority in Thoothukudi has retendered the request for proposal (RFP) for the ₹7,056 crore outer harbour project. The earlier tender was cancelled due to poor response - only two (Vedanta and Premier Science and Technology) applied and both were disqualified. This time the eligibility criteria has been modified to enable larger participation. Details are awaited on the changes made in the second tender.

The project will involve, dredging and construction of breakwater on design, build, finance, operate and transfer basis with a total handling capacity of 4 million TEUs (twenty foot equivalent units) per annum in two stages.

The indicative project cost of the first stage of 2 million TEUs is ₹4494 crore and involves development of container terminal 1 (berths I and II), dredging and construction of breakwater and other common project Facilities. The second stage (2 million TEUs) will cost ₹2561 crore for developing container terminal-2 (berths III and to IV).

The Viability Gap Funding (VGF) will be limited to a maximum of ₹1,950 crore or an actual quote, whichever is lower, says the RFP document issued by the Authority.

The Concessionaire has to develop two container terminals of 1,000 m quay length each in the outer harbour. The construction period for Container Terminal -1 (Berths I and II) is 36 months and for Container Terminal -2 (Berths III and IV) is 24 months.

The Concessionaire shall commence the construction activity of Container Terminal -2 (Berths III and IV), the day following completion of 24 calendar months when the average annual volume of cargo handled at the Project Facilities and Services reaches to a level of 70 per cent of Project Capacity for 2 (two) consecutive years of stage I or the day following completion of 96 calendar months from the date of award of concession, whichever is earlier. However, the Concessionaire has the liberty to commence the construction of Stage II prior to that.

The Concessioning Authority shall hand over the required waterfront area for development of the subject proposal on DBFOT basis for a period of 45 years, the document says.

In February, the Authority issued a tender for the project. The two applicants were rejected due to lack of experience with the two companies in the sector. Large companies, including Adani Group and JSW, not showing interest in the request for qualification has raised eyebrows on the project’s viability.

Sources said considering there is not much of a hinterland to support the future container traffic growth, and the presence of neighbouring ports like Vizhinjam and Vallarpadam, there is scepticism if the new project could annually handle 4 million TEU . Thus, investing ₹7,056 crore may not give returns. An investment of around ₹4,000 crore for 2-3 million TEU capacity would be ideal, they added.

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