DESPITE doubts of the Indian Ministry of Shipping, the tiny state of Kerala will soon have an international container transshipment terminal (ICTT) at Vizhinjam near Thiruvananthapuram to rival Dubai's DP World nearby terminal at Cochin.
With an annual capacity of a million TEU, ICTT loaded 351,000 TEU in the first quarter, of which transshipment volumes were less than 27,000 TEU, notes Livemint Wall Street Journal.
There is scepticism whether India can have two transshipment facilities when the first is struggling to meet full potential despite the government's relaxation of cabotage rules to steal cargo from rival Colombo.
A container transhipment terminal is served by smaller feeder vessels bringing in cargo which is then loaded onto larger ships. Larger vessels bring about economies of scale, and lower the costs, which means lower freight rates.
India's shipping ministry, which controls Cochin Port where DP World runs the ICTT, has doubts about the Kerala government's Vizhinjam terminal plan based on a public-private partnership.
Four attempts over a decade have failed to get the scheme off the ground for various reasons. Now Kerala has posted the project for a viability gap funding (VGF) with central government participation to make it more attractive to outside bidders.
This would be the first instance of an Indian port project has been considered for VGF, under which a project can secure 20 per cent of the capital costs from the central government with the state contributing 20 per cent.
The combined viability gap funding for the Vizhinjam project is estimated at INR15.8 billion (US$253.9 million) with central and state governments contributing INR7.9 billion each.
The bidder seeking the lowest grant will win the INR65 billion one million TEU annual capacity terminal concession, to be brought up to 2.5 million TEU at full build-out in later stages.
The Kerala government will also fund a INR12.1 billion breakwater, and pay INR6 billion towards land acquisition and another INR7 billion laying a 12-kilometre rail line.
Vizhinjam has received the key environment and coastal regulation zone (CRZ) clearances from the Ministry of Environment. It has received an in-principle approval from one of the two panels set up to approve VGFs.
It now has to get approval from one more committee as well as the signature of Indian Finance Minister Arun Jaitley.
Vizhinjam would rival Cochin ICTT because it would cater to the same cargo. After having INR16 billion spent by New Delhi and an equal amount by DP World, the shipping ministry asks if it is wise to promote Vizhinjam for transshipments.
By definition, transshipment terminals or ports are not dependent on its hinterland. Vizhinjam is designed to win back India's container cargo transshipped through neighbouring ports by offering superior infrastructure.
PORTS
15 September 2014 - 22:03
India Shipping ministry doubts box shop at Vizhinjam near Cochin is wise
DESPITE doubts of the Indian Ministry of Shipping, the tiny state of Kerala will soon have an international container transshipment terminal (ICTT) at Vizhinjam near Thiruvananthapuram to rival Dubai's DP World nearby terminal at Cochin.
PORTS
15 September 2014 - 22:03
India Shipping ministry doubts box shop at Vizhinjam near Cochin is wise
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