Indian Railway Finance Corporation Ltd (IRFC), Sagarmala Finance Corporation Ltd (SMFCL) and VOC Port Authority have signed a tripartite memorandum of understanding on Tuesday for funding breakwater construction and allied onshore-offshore facilities through Hybrid Annuity Mode (HAM) for a mega container terminal in the outer harbour of the state-owned port located at Thoothukudi in Tamil Nadu.

The agreement provides for joint funding of up to Rs 15,000 crore for eligible projects aimed at port capacity expansion under the Sagarmala programme and the PM Gati Shakti National Master Plan.

VOC Port Authority has called bids to construct breakwater along with capital dredging and reclamation for backup yard on Public Private Partnership Hybrid Annuity Mode (HAM) for the outer harbour project at an estimated cost of Rs 9,859.45 ?????.

The tender, issued in December, comes some two years after Prime Minister Narendra Modi laid the foundation stone for the outer harbour container terminal project on February 28, 2024, following Cabinet approval for the Rs 7,055.95 crore project.

VOC Port Authority, though, failed to attract bidders even after two rounds of auctions spread over 20 months, causing huge embarrassment to the Modi government.

The delay has also escalated the total project cost of constructing the mega container terminal by 75.1 per cent to Rs 12,354.78 crore, including a whopping 155 per cent increase in dredging expenses to Rs 3,622.55 ?????, raising concerns over lack of accountability for the "faulty" cost estimates previously worked out by the National Technology Centre for Ports, Waterways and Coasts (NTCPWC).

If a project cost increases by 20 per cent, it requires fresh clearance from the Cabinet ahead of floating tenders. In this case, the project cost will be double the cost approved earlier by the Cabinet.

In its zeal to showcase the mega project to the public ahead of the polls, VOC Port Authority floated the HAM tender without waiting for the Public-Private-Partnership Appraisal Committee (PPP-AC) and the Union Cabinet to clear the restructured project, an industry source said. This is seen as a violation of the guidelines issued by the Central Vigilance Commission on tendering public projects.

"The tender was issued before getting Cabinet approval to beat the model code of conduct for the upcoming assembly polls in Tamil Nadu," said a government official. "If we wait for Cabinet approval and the model code of conduct kicks in, then the tender cannot be floated for 2-3 months. The process of obtaining Cabinet approval for the project is underway," he said.

The restructuring involves splitting the project into two components with the construction of breakwater, rock bund, wharf along with capital dredging, reclamation for backup yard and allied onshore facilities, including maintenance, to be undertaken on HAM basis by adopting the model followed for the Vadhvan port in Maharashtra.

The bid will be awarded to the entity quoting the lowest cost for the works.

Whereas the container terminal will be developed through the PPP route for which bids will be invited over the next 12 months, the official said.

In the previous rounds of tendering for the ambitious 4 million twenty-foot equivalent units (TEUs) capacity container terminal in its outer harbour, the VOC Port Authority had structured the project on the viability gap funding (VGF) model.

Source: ET Infra. Com 

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