The Tamil Nadu Maritime Board has scrapped a tender to privatise the port located at Cuddalore as potential port operators stayed away from placing price quotations due to concerns over lack of adequate land and other stiff terms, multiple sources said.
The bid deadline was extended multiple times and the latest ended on July 19.
“The due date ended on July 19 by which time no bids were received. So, we have closed the tender,” a Tamil Nadu government official said, adding that a decision on floating a fresh tender is yet to be taken.
“The bidders requested the state government to give land for the project. In the tender, the state government had not committed to giving land and without the land, the project was not promising,” said a person who participated in the pre-bid meeting for the project. “At the minimum reserve price also, the project was not profitable,” he added.
Cuddalore port, located at the mouth of rivers Uppanar and Paravanar along Bay of Bengal, is primarily an anchorage port where ships arrive and stay at anchorage about 2 kms from the port estuary.
The existing Cuddalore Port was developed by the state government with an investment of Rs 159.45 crore.
The successful bidder has to invest some Rs80 crores to develop additional berths for handling higher capacity vessels by acquiring required back up land and undertake development, marketing, operation, and maintenance of the port.
The private investor will also be responsible for developing road and rail connectivity for the project.
The state government was of the view that the successful private bidder should acquire the land for the project instead of the government doing this task.
However, during the pre-bid meeting, the state government found that none of the potential bidders were willing to invest in acquiring land. Though land is available, they wanted the government to acquire the land and hand it over to them, said the state government official mentioned earlier.
In March, the Tamil Nadu Maritime Board called bids from private firms for marketing, operating and maintenance of the operational port at Cuddalore along with 111.72 acres of land for 50 years which can be extended up to 99 years based on mutually agreed terms.
The Tamil Nadu Maritime Board had also agreed to provide 47.14 acres of coastal land adjoining the waterfront of 3.60 km to the private investor for setting up greenfield facilities.
The private operator had to acquire the back-up land for the port.
Considering the concession period of 50-99 years, the area of 47.14 acres was “very less”, potential bidders told the government.
The selected bidder had to pay land license fee to the state government for leasing 158.86 acres (111.72 acres of brownfield facility land plus 47.14 acres of greenfield facility land for the entire concession period of 50 years. The land licence fee was pegged at Rs 4 crore and Rs 2.75 crore at the time of signing the concession agreement.
The charges payable for marketing, operation, and maintenance of the brownfield port facilities were set at Rs55 per metric ton (approved cargo charges) of cargo handled.
The private operator should achieve the Minimum Guaranteed Throughput (MGT) per annum set out for the brownfield port facilities. There is no MGT for the greenfield port facilities.
The cargo charges will be hiked by 15 percent once in 3 years and the MGT will be hiked by 50 per cent starting from 3 Lakhs to 35 Lakhs in 7 years and till the end of 50 years.
Potential bidders said that the cargo charges of Rs 55 per metric ton for the brownfield facility was “substantially high” and asked the state government to revise it in “line with existing non-major ports”.
The percentage of revenue sharing on gross revenue from greenfield port facilities over and above the base value of 3 percent will be the bid parameter for determining the highest bidder for award of concession.
The private operator will be free to fix and revise tariffs.
However, bidders were of the view that the base revenue share of 3 per cent for the greenfield facility was “too high” and urged the state government to “rationalise” it.
(source: ET Infra)
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