Tamil Nadu: V O Chidambaranar Port Gets PPPAC's Approval For Rs 7,056 Crore Container Terminal Project

The V O Chidambaranar Port Authority, in Tamil Nadu, has received approval from the Public-Private-Partnership Appraisal Committee (PPPAC) to construct a 4 million twenty-foot equivalent units (TEUs) capacity container terminal in the port's outer harbour.

V O Chidambaranar Port Authority (VOCPA) is one of the 12 major ports in India and the second largest port in Tamil Nadu. The VOCPA was declared a major port by the government of India in July 1974.

The PPPAC is established for the appraisal of public-private partnership projects in the central sector to ensure speedy appraisal of projects, eliminate delays, and have uniformity in appraisal mechanisms. 

The project, with an investment of Rs 7,055.95 crore, has also been granted "in-principle" approval for a viability gap funding (VGF) of Rs 1,950 crore by an empowered committee.

The empowered committee recommended-VGF is subject to final approval by Finance Minister Nirmala Sitharaman. This marks the second port project to receive VGF from the government, following the forthcoming Vizhinjam Port project.

The V O Chidambaranar Port Authority will initiate a global bidding process for the construction and operation of the terminal, with a concession period of 45 years, extendable by ten years after obtaining cabinet clearance.

In a departure from the traditional model used by union government-owned major ports, where cargo handling contracts are awarded based on the highest royalty per TEU or per ton of cargo quoted, the project will be awarded to the private entity proposing the lowest VGF (within Rs 1,950 crore) for building the terminal.

The Union government will contribute Rs 1,411.19 crore (20 per cent of Rs 1,950 and crore), and the Ministry of Ports, Shipping, and Waterways/VOC Port Authority will contribute the remaining Rs 538.81 crore (7.64 per cent) towards the VGF.

The VGF will be disbursed in two stages, with Rs 686.02 crore in the first stage and the balance of Rs 1,263.98 crore in the second stage, reports Economic Times.

If the actual VGF determined through the bidding process is less than Rs 1,950 crore, the VGF for the two stages will be reduced proportionately. This model mirrors the approach adopted by the neighbouring Kerala government for constructing a container transhipment port at Vizhinjam near Thiruvananthapuram.

V O Chidambaranar Port is an artificial deep-sea harbour formed with rubble mound-type parallel breakwaters projecting into the sea for about 4 km.

VOPCA is working on a project worth Rs 7,200 crore to make VOC Port a transhipment hub that can compete with Colombo and Singapore.

Significance Of VOC Port

VOC Port's strategic positioning close to the East-West International Sea Route is a pivotal asset. Situated at latitude 8° 45'N and longitude 78° 13'E, it holds a key geographic advantage, offering an ideal location for ships traversing this critical trade route.

It can serve as an alternative or complement to these hubs, offering shorter routes for certain trades and easing congestion in the region.

Moreover, VOC Port is well-sheltered from the fury of storms and cyclonic winds, making it a safe and reliable choice for shipping lines.