Friday, May 17, 2013

Chennai, Ennore Ports miss the bus on new box terminals


With Chennai Port formally rejecting the lone bid for its ambitious Rs. 3686-crore mega container terminal and Ennore Port delaying the process for its first container terminal, EXIM fraternity in South India feels that both the Union-Government-run ports in the State have missed their opportunity to capitalize on the burgeoning box handling market.

Besides, the EXIM fraternity also pessimistically noted that even if they (both the ports) ultimately come out with their mega terminals in another four years time, there will not be any captive cargo (for the new terminals) by that time, as four existing container terminals – DP World-Chennai, PSA Chennai (both located inside Chennai Port), Kattupalli International Container Terminal (promoted by L & T Shipping at Kattupalli) and Krishnapatnam Port Container Terminal (Nellore, Andhra Pradesh) would be ruling the trade.

It may be noted here that all the four private terminals are competing with each other for boxes from the region and are located in the close vicinity of Ennore and Chennai Ports.

After several months of delays and negotiations, Chennai Port Trust’s Board last week formally decided to reject the lone bid received from Essar Ports as it offered only a 5.25 per cent revenue share.

The whole bidding process was mired in controversy as the only other bidder, Adani Ports failed to secure the necessary security clearance from Centre. Since the port was desperate to move forward in the mega project to capture the flourishing container trade, it opened the bid received from Essar Ports, which had received security clearance within a few months time and offered about 5 per cent revenue share.

“With the rejection of a lone bid and planning to go for a fresh tender to finalise the project by Chennai Port it would eventually lead to further delay of not less than two years. This is not a good sign for the port’s ambition of becoming a major player in box trade from east India,” sources in the know-how of cumbersome process told Sagar Sandesh.

On the other hand, Ennore Port, located near Chennai Port, also suffered a huge set-back in mid-2012 when its first attempt to set up a container terminal failed to take off at the eleventh hour.

After showing initial signs of the project being on the right track, Bay of Bengal Container Terminal consortium, which got the orders from Ennore Port for the box terminal in 2010, struggled with financial commitment later. The consortium’s failure to comply with financial closures ultimately made the Ennore Port management to terminate it in October last.

Since its first attempt to have box terminal failed miserably, Ennore Port tread cautiously in its second attempt that started in February this year and over 10 companies showed expression of interest (EoI) to the project.

However, next rounds of procedures like RFQ and RFP could take a few more months and if everything goes well as per plan, Ennore Port may be able to award the project to a successful bidder by December this year.

According to EXIM players, even if the project gets awarded in December, it will take a minimum of three years to acquire final shape and the terminal would be available for commercial activities only by 2016-end.

So, both the new container terminals at Chennai and Ennore Ports are expected to be available only after 2016 and it has to be seen how the new facilities would throw a challenge to the existing four terminals, which have a combined capacity of handling over six million TEUS annually and yet to touch their capacity,” a senior port analyst told Sagar Sandesh.

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