Association for Tuticorin Hub Port Development calls for expeditious implementation of the VOC Port Outer Harbour Project

 

The Association for Tuticorin Hub Port Development has, in a communique to the Chairperson, VOC Port Authority, urged priority implementation of the VOC Port Outer Harbour Project. The port has immense potential to attract cargo traffic akin to Colombo, Singapore, Port Klang and Jebel Ali, provided the necessary infrastructure is developed in a timely and strategic manner, it emphasised.

The Association highlighted that it has been consistently working towards developing VOC Port as a regional transhipment hub on the South East Coast, leveraging its strategic location and growing trade potential.

The communique elaborated:

The Outer Harbour Project was initially proposed in the Union Budget of 2012-13 and reiterated in the 2014-15 Budget. Further, the Hon’ble Prime Minister of India, in his public address on 25th February 2021 at Coimbatore, announced the development of VOC Port as an international transhipment hub. Subsequently, on 26th February 2024, the Hon’ble Prime Minister formally laid the foundation stone for the sanctioned VOC Port Outer Harbour Container Terminal Project.

The project for development of two Container Terminals, each with 1,000 m quay length to be developed in two phases with a gap of 5 years between the two, included the construction of breakwater and dredging. It was approved with an estimated cost of INR 7,055.95 crore on a DBFOT (Design, Build, Finance, Operate and Transfer) basis. Government support of INR 1,950 crore was sanctioned as Viability Gap Funding (VGF) towards the construction of the breakwater and dredging which are non-core areas for the investors interested in terminal development and its operations. As such, the Port Authority could not attract the targeted investors to the project in the tender floated last year.

The view of the international terminal investors was conveyed to VOC Port Authority during the meeting the Authority had with them at Mumbai on 18.03.2024. Their concerns were:-

* The inclusion of breakwater construction and dredging, the two capital-intensive civil works in the project, may not help the Authority get private terminal investors as it is not their core area of business.

* Insufficient VGF support compared to project size and risk.

* The project cost estimates, particularly with regard to the civil works of construction of breakwater and dredging are low compared to the cost incurred elsewhere.

In the terminal development projects involving private investments so far, the work of breakwater construction and dredging were not included. But this time, in the project at VOC Port, the development of civil infrastructure viz. breakwater and dredging is included which is not an attraction to private investors. 

After realising the position, the VOC Port Authority, with the approval of the Central Government, is now considering a revision of the tender terms to separate the civil infrastructure works from terminal development, an approach that is both logical and practical to ensure the project’s success.

The Outer Harbour Project must be prioritised for implementation due to the following compelling reasons:

*Approaching capacity limit: The port’s current container handling capacity of 1.2 million TEUs is expected to be fully utilised within the next two years and, therefore, making additional capacity with required draft of minimum 18 m to attract mainline vessels to the port to handle both the gateway and transhipment cargo within next two years is imperative.

* Stunted growth due to infrastructure gaps: VOC Port has not achieved its projected growth rate primarily due to the absence of facilities for mainline vessels, which are essential for EXIM (Export-Import) trade competitiveness. Unable to absorb transhipment spillover from nearby international transhipment hubs affected due to geopolitical issues.

* Upcoming industrial and logistics developments: Emerging projects such as the EV car manufacturing unit by VinFast, PM-MITRA Textile Park in Virudhunagar, upcoming defence and space sector developments in Tuticorin, International Furniture Park in SIPCOT, Tuticorin and the Multi-Modal Logistics Park (MMLP) in Coimbatore are expected to generate substantial cargo traffic.

* The presence of Tata Solar and Vikram Solar at the SEZ (Gangai Kondan Special Economic Zone) along with upcoming upgraded airport facility in Tuticorin will significantly boost the case for Outer Harbour Development.

 Opportunities from expiring concessions: The operating tenures of certain container terminals in India are nearing expiry. These terminal operators may be actively exploring new ventures, making this an ideal time to attract their interest in VOC Port.

In view of all the above, we strongly urge the Port Authority to proceed with urgency and without delay in revising and refloating the tender, incorporating the model where the Port Authority undertakes the basic infrastructure (breakwater, dredging, etc.) and private operators develop and manage the terminals.

The terminal to be developed ought to have 18 metres draft with provision in the structure to further deepen it to go for 22-23 metres draft in the future. 

We trust the Ministry of Ports, Shipping & Waterways and the VOC Port Authority will consider this request positively and take immediate steps to advance this much-needed project on priority basis.

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