Work on the 3rd container terminal project at VOC Port Tuticorin to start soon

Work on the third container terminal at VOC Port Tuticorin capable of handling Six lakh TEUS a year is all set to commence since the PPP contractor for the terminal project JM Baxi has achieved financial closure with the help of securing funds from the state bank of India, The terminal is expected to be commissioned by the beginning of 2025.

State Bank of India is the sole lender to the project and the credit facility agreement was signed by the two entities on Friday, according to an announcement from J M Baxi Ports & Logistics. The details of the extent of funding by the SBI was however not disclosed in the official release issued by JM Baxi.

The privatisation of Berth No 9 at the eastern coast port into a container terminal (depth of 14.2 metres) with an investment of Rs 434.17 crore will boost V O Chidambaram Port’s container handling capacity by 6 lakh twenty-foot equivalent units (TEUs) a year to 1.8 million TEUs a year. Tuticorin International Container Terminal, a wholly owned unt of J M Baxi Ports & Logistics, had emerged the successful bidder for the project by placing the highest royalty price bid of Rs1,900.44 per TEU when the price bids were opened in August last year. Port tenders at major ports (owned by the Centre) are decided on the basis of royalty per TEU: the entity willing to share the highest royalty per TEU with the port authority wins the deal for 30 years.

The royalty payable will rise annually in tandem with the increase in wholesale price index (WPI), a measure of costs. The terminal operator will be free to set market rates under the new Major Port Authorities Act and the model concession agreement (MCA). The project is a part of the National Monetisation Pipeline (NMP) wherein operational infrastructure assets including port terminals will be privatized through the public-private-partnership (PPP) route.

V O Chidambaram Port, the third largest container handler among the dozen State-owned ports, currently has two container terminals in its inner harbor. The two terminals handled a combined 7,81,458 TEUs or 15.4 million tonnes (mt) in FY22 compared to 7,62,000 TEUs in FY21.

Container cargo accounted for some 45 percent of V O Chidambaranar Port’s total cargo of 34.12 million tons (mt) in FY22.