The plan of Ennore Port Ltd. (EPL) to build a world-class container terminal, about 30 km from Chennai Port, suffered a serious setback.
The concessionaire withdrew from the project, claiming it was unviable due to cost escalation and the changed economic scenario. Incidentally, the announcement was made through the company’s website, a day prior to the expiry of its extended deadline.
EPL officials have sounded the Shipping ministry about the sudden development and the board of directors is likely to meet in the third week of October to take stock of the situation. The meeting assumes significance as the present chairman-cum-managing director S. Velumani’s term is set to end by November.
After crossing legal hurdles, EPL awarded the contract to Bay of Bengal Gateway Terminal Pvt. Ltd. in August 2010 to construct the Rs. 1,407-crore terminal. While the concessionaire failed to achieve financial closure on time, EPL warned of invoking the bank guarantee and later terminating the contract. Accordingly, the bank guarantee was encashed in April 2012 and the concessionaire was given time till September 28 to achieve financial closure and abide by other conditions in the contract.
However, on September 27, Bay of Bengal Gateway Terminal through Eredene Capital, said it was withdrawing from the project with immediate effect.
The decision was taken by consortium partners in view of the changed economic outlook in India, the increased cost of local financing, depreciation of the rupee and lower projected growth in container traffic. According to official sources, the contractor was asked to build the first phase of the 18 million tonnes per annum container terminal to handle mainline vessels.
A senior EPL official told The Hindu: “It is a great setback as we have lost a significant amount of time in awarding the contract. Now, it may take another three to four years to complete the project. Even now, we are confident it can be completed ahead of Chennai Port Trust’s mega container terminal, if we find the right partner.”
Expressing dismay over the sudden development, exim trade representatives said the completion of this project would have changed the port’s image due to the proximity of most of the container freight stations.