Port negotiating with concessionaire VCTPL so as to launch the Rs 633 cr container terminal extension project early

Differences over Internal Rate of Return calculations with concessionaire Visakha Container Terminal Private Limited (VCTPL) are likely to delay Visakhapatnam Port Trust’s ambitious project to extend the container terminal at a cost of Rs.633.11 crore.

Sources in VPT confirmed that the signing of concession agreement for 30 years to complete the project within 24 months would be delayed due to ‘very low offer’ made by VCTPL.

The technical feasibility report conducted by the VPT to take up extension of container terminal had envisaged IRR at 14 per cent. VCTPL, which developed the container terminal in June, 2003 with DP World and United Liner Agencies as the joint venture partners, emerged successful bidder for taking up extension of the existing terminal sometime ago. The Cabinet Committee on Economic Affairs approved the project on April 2.

Following the dispute and the reported offer of below 5 per cent revenue share by VCTPL, the port is trying to arrive at an understanding so as to launch the project at the earliest.

When contacted, Visakhapatnam Port in-charge Chairman G.V.L. Satya Kumar told The Hindu: “We are trying for a negotiated settlement and hopeful of a solution.”

A senior official of VCTPL seeking anonymity said the projections made by VPT were ‘unrealistic.’ He said for the fourth terminal at Chennai, Essar had quoted less than five per cent. Going by growth rate of container trade, the IRR calculation should be made with mutual acceptance, he said. Adani Port, Gangavaram Port and Navayuga Engineering were among seven firms which initially evinced interest in the project. According to the Press Information Bureau website, the project will enhance container handling capacity of the port from 0.4 million TEU (twenty foot equivalent units) to one million TEU.