Chennai Port asks Essar Ports to review project bid

Revenue share offered too low

The Chennai Port Trust has asked Essar Ports, the sole bidder for the Rs 3,683-crore container terminal project at Chennai, to reconsider its offer that had offered a revenue share of 5.25 per cent.

At today’s board meeting, it was decided to set up a negotiation committee to review the bid amount, said a senior board member of the Chennai Port Trust. “We have not come to a conclusion what the percentage should be, we will wait for the company to come back,” said the board member.

An email sent to Essar Ports did not get any response.

Chennai port is one of the 13 owned by the government of India. Adani Ports and Special Economic Zone Limited (APSEZ) had shown interest in the project twice. For the first time, it was rejected due to the low bid and, second time, due to security clearance.

According to a senior port official, Essar Ports has offered a revenue share of 5.25 per cent, which is slightly higher than Adani Ports’s earlier bid of five per cent. The official added the revenue share offered was too low and the Port Trust was planning to ask Essar Port to increase the share.

Essar and Adani were the two final contenders, while seven companies entered the qualification stage for the container terminal project, which will have a capacity to handle four million twenty-foot equivalent units (TEU) per annum.

Of the total project cost, Chennai Port Trust’s share will be Rs 561 crore, while the private partner, who will build, own and transfer the project, will invest Rs 3,125 crore.

The proposed investment includes Rs 963 crore towards breakwater, Rs 362.25 crore for dredging, Rs 496.80 crore to construct berths, Rs 124.20 crore for reclamation and the rest is for others.

Essar Ports Limited (EPL) develops and operates ports and terminals and is one of the largest private sector port companies in India by capacity and throughput. It provides services for liquid, dry bulk, break bulk and general cargo. If the company gets the container terminal project at Chennai, this will be first container terminal project.