The Peninsular and Oriental (P&O) Steam Navigation Ltd of Australia has taken over the Rs 400 crore container terminal project at Chennai port.
P&O Ports had been selected as the preferred bidder for the 30-year concession to develop the port of Chennai last year but managed to take control of the facility only last month following labour trouble.
The terminal will be constructed on a build, operate, transfer basis. The mandate includes developing and managing the terminal for a 30-year period, with construction scheduled to be completed in two years' time.
P&O Ports anticipates investments to the tune of $130 million in the first five years of the concession period for promoting Chennai as India's leading east coast box port.
At present, facilities include a 600 million quay wall with a draught of 13.4 million alongside, to which a further 350 million of quay is planned be added.
The private operator is required to ensure at least 30 per cent of the total container traffic at the terminal. The condition is being levied in order to see that the facility develops as a hub port.
At Chennai, P&O Ports has promised a traffic of 350,000 TEUs in the first year, 400,000 TEUs in the second and 500,000 TEUs by the third. Throughput is pegged at 650,000 TEUs once the iron ore berth is added, touching 800,000 TEUs in the year after.
P&O Ports will hold 75 per cent in the port, the Chennai-based Chettinad Group 20 per cent and the M B Eduljee Cassinath Group five per cent.
P&O Ports faced strong competition from both Hutchison Port Holdings of Netherlands and Port of Singapore Authority (PSA) Corporation, whose initial bids were rejected by the Indian authorities. When asked to re-bid under revised terms and conditions, PSA Corp declined to do so and withdrew from the bidding process, following which P&O Ports' 37 per cent royalty payment was viewed as superior to the figure of 27 per cent proposed by Hutchison.
