The finalisation of contract for extension of container terminal by the Visakhapatnam Port Trust may not be an easy affair unlike other Public Private Partnership (PPP) projects following contradictory claim over payment of royalty on gross revenue share.
Visakha Container Terminal Private Limited (VCTPL) emerged as the lone bidder in the Request for Proposal sought by VPT for second time after the earlier attempt ran into rough weather. VCTPL and VPT were engaged in a wordy duel over the methodology chosen for arriving at revenue and traffic projections.
The bid submitted by VCTPL will be opened on November 4 as per the time-table set by VPT at the time of issuing notification for Request for Proposal (RFP). The option was given to submit fresh proposals to all the seven firms, which had earlier bought bid documents. Earlier, VCTPL had offered maximum 10 per cent of gross revenue share to VPT whereas the port authorities insisted on payment of more.
Indian Ports Association in its feasibility report recommended a gross revenue share of 13 to 15 per cent. After VCTPL lodged strong objection to the projections made by IPA, VPT appointed RITES for a third party report. RITES had indicated that the gross revenue share should be fixed between 20 to 25 per cent.
Sources told The Hindu that the finalisation of concession agreement for extension of container terminal at a cost of Rs.633 crore has turned into a ‘now or never’ issue.
This is because of fact that Krishnapatnam, Gangavaram and Paradip ports are getting ready to enter container business. If their plan becomes true, this will make a heavy dent on the container traffic potential of VPT from the vast hinterland.
VCTPL developed the existing container terminal on PPP basis after signing an agreement with VPT a decade ago. It had handled a throughput of 2.47 lakh TEU last year and is expecting it grow by just three to four per cent during current fiscal due to economy slowdown hitting cargo handling at all the major and non-major ports in India.
An official of VCTPL said on condition of anonymity that benchmarks adopted for stack height were unrealistic. This would enhance the terminal capacity but crash the handling prices thereby casting a huge operational burden on the private operator. When contacted, a senior port official said they were giving a wonderful opportunity to the private operator to make profit, part of which has to be given to landlord port.
Sources in VCTPL said Ennore Port and JNPT were collecting less from the private operator towards gross revenue share.
The sources claimed for Chennai Mega Container Terminal, the share went up to five per cent from an offer of one per cent.
