Kerala may drop PPP plan, to float fresh bids for Vizhinjam ICT

Written by M Sarita Varma | Thiruvananthapuram | Updated: Aug 14 2009, 06:01am hrs
Kerala is in a fix over how best to build the Rs 7,000-crore Vizhinjam Deepsea ICT (International Container Terminal), after Zoom Developers was turned down and Lanco Kondapally chose to exit. Although set on the world's deepest natural port location at 24 metre depth, factoring out recurring dredging costs, the mega-project had been hit by assorted snags from the defence ministry crackdown to discords in identifying the right partner.

The present indications are that the state would drop the plan to set up a PPP (public-private partnership) company and go for re-tendering to identify a BOT (build operate and transfer) partner. There are also proposals to sweeten the plan for the right partner.

CPI(M), which heads the ruling coalition LDF, is dead against the PPP option, sources told FE.

It could take too much time to garner nearly Rs 7,000 crore for the company and was not pragmatic, state secretariat of CPI(M) is understood to have told chief minister VS Achuthanandan. The CM, along with sate ports minister M Vijayakumar, had been pushing for a Vizhinjam port PPP in the model of Kochi International Airport, which became the country's first greenfield airport in PPP route. This proposal would have to be approved by the steering panel of LDF before state cabinet gives it the thumbs up.

Experts feel the time-escalation could hit the project costs in two ways. One, the project estimate had spiralled by 25% to Rs 5,348 crore in 2008, by the re-estimates by Chennai-based L&T Ramboll. The latest estimate puts the costs at close to Rs 7,000 crore. Two, Vizhinjam sets it guns on business from atleast 50% of the 60,000-odd motherships to-and-froing the Suez Canal route, through its cost-advantage to exporters. It is envisaged to handle 4.1 million containers annually, in the first phase. New neighbourhood ports have been fast to make an earlier claim on this business, feasting on Vizhinjam's delay.

State is yet to detail on how to serenede the right partner to the project. Last year, it had thrown in a Swiss Challenge carrot to the Vizhinjam plan. A football term, this means that if someone challenges the present partner's tender with better offer after the 30 years tenure, the earlier incumbant gets a chance to match it promptly.

The five consortia in shortlist were (a) DS Constructions, Apollo Enterprises and Dubai-based KGL Ports International (b) Nagarjuna Construction, Maytas and Singapore-based OPM (c). Videocon Industries, Gammon India, Gammon Infra and Sical Logistics (d) Lanco Infratec, Lanco Power and Pembinaan Redzai Sdn Bdh and (e) Zoom Developers and UK-based Portia Management.