27 February 2024 (Lloyd's List) - INDIA’s VO Chidambaranar Port port authority has initiated the bidding process for the construction of two container terminals in its outer harbour with a total investment of Rs70.6bn ($851m).

Each with an annual capacity of 2m teu, the two facilities will be able to handle 22,000 teu vessels with up to a 21 meter draught, according to the bidding document.

Located in the Gulf of Mannar, the VOC port is close to east-west international sea routes on the southeastern coast of India.

VOC currently has two container terminals, run separately by PSA SICAL Terminals and Dakshi Bharat Gateway Terminal, with a combined capacity of just over 1m teu and an average utilisation rate of approximately 80%, according to local media.

The new project, estimated to cost Rs45bn for the first terminal and Rs25.6bn for the second, will receive viability gap funding of up to Rs19.5bn.

“The project shall be awarded to the bidder quoting the lowest VGF,” the port authority said.

VGF is a form of capital subsidy offered by the government to encourage private sector participation in public projects that may otherwise not be financially feasible.

The two terminals will be constructed consecutively, with an expected duration of 36 months and 24 months respectively.

The bidding submission for the construction and 45-year concession of the two terminals will close on April 12.

The move comes as India is seizing the opportunity presented by the thriving growth of its domestic manufacturing and exports, partly driven by supply chain shifts away from China, to aggressively boost port construction.

Developing port facilities through public-private partnerships has been undertaken to fulfil the government’s initiative of transforming India’s districts into export hubs. 

Last year, DP World entered into a concession agreement worth $510m with the Deendayal Port Authority to develop a new container terminal with a capacity of 2.19m teu per year at Tuna-Tekra in Kandla.

Furthermore, the global terminal operator announced a substantial investment of $3bn in Gujarat state last month, focusing on the development of new ports, terminals and economic zones.