Vizhinjam International Seaport

Project History

The Vizhinjam Port was originally conceived about 25 years ago. The initial project model was suggested as the Public Private Partnership (PPP)- Private Services model. Two rounds of bidding and tenders called under the PPP model ended up as a failure as a result of various reasons including the inherent un-viability of the project's economic rationale. The first round was granted to a Chinese company that failed to secure the security clearance from the Center, the second round which was first awarded to Lanco Group and then challenged in the Kerala High Court by Zoom Developers led to the eventual withdrawal by Lanco Group. The Kerala cabinet on June 10, 2015, decided to award the multi-thousand crore Vizhinjam international port and deep-water container transshipment terminal to Adani Ports and SEZ, the sole bidder.

The International Finance Corporation (IFC), a member of the World Bank Group is currently the transaction advisor to VISL. The IFC was appointed in November 2009 as the lead advisor to the Vizhinjam Port. The IFC undertook in 2009 - 2010 a series of studies and reports that recommended the State to undertake the project under the Landlord Model. The Landlord model would see the State make the final investment of over 1 Billion USD to build the port. As opposed to the PPP model where the Private Partner would bear the cost of the port. The IFC has also undertaken the task of conducting the Environmental Impact Assessment Study of the Container Port.

After the IFC recommended landlord model was accepted by the State Government, a bidding round concluded with a consortium led by Welspun being the sole eligible company for the port operator role. The Welspun Group however requested a grant of about 480 Crores (Approximately 90 Million USD as a grant in terms of Net Present Value over 16 years). Negotiations between the State Government and the Welspun Group resulted in Welspun agreeing to reduce the grant to 400 Crores (Reduction of about 15 Million USD). This offer was rejected by the Kerala State Government since the terms of the Public Private Partnership saw no economic rationale for the State Government.

IFC has commissioned a team of consultants for the implementation of the project.

• Technical design and environmental and social study by Royal Haskoning.

• Investment quality market study by Drewry Shipping Consultants.

• International legal team of Allen & Overy (Singapore) and Trilegal (India).

• Asian Consulting Engineers who undertook the Environmental Impact Assessment after being contracted to do so by the IFC

Expert Apprisal Committee of the Ministry of Environment had recommended clearance for the project on 3 December 2013.Tenders for construction of break water and fish landing centre and Port operator were floated on very next day.

Project Details

The port development is proposed to follow the landlord port model where the dredging, reclamation as well as basic external infrastructure work like construction of break-water and quay wall will be taken up by VISL. Further, it is also expected to monitor Land Acquisition, road/rail infrastructure, water and power supply required for the construction and operations of the port on behalf of Government of Kerala (GoK).

The port terminal will be developed under Public Private Partnership(PPP) model wherein the construction and operation of the port terminal would be on Build, Operate and Transfer (BOT) basis. The port development along with the external infrastructure work is envisaged to be carried out in phases with the cumulative cost estimated to be around Rs. 6595 crore. The port is envisaged to provide in total 2000m of quay length in three phases and is designed to cater primarily for containers transshipment, besides providing for other type of cargo such as Multi-Purpose, Break Bulk.

The construction of basic civil infrastructure viz. dredging, land reclamation, construction of breakwaters and quay wall, as also land acquisition, road/rail connectivity and other external infrastructure required in phase 1 and the cost for the same is estimated to be Rs. 3040 crore. The said project cost is proposed to be funded through Rs. 1130 cr as equity from GoK and balance amount is proposed to be raised as debt through loans from banks/ institutions and through bonds.

Importance

During the last decade, there has been a steady growth of container traffic at the Indian ports. Currently, the majority of these ports rely on direct services or use far off ports for their transshipment needs. This necessitates the establishment of an International Deepwater Seaport and Container Transshipment Terminal in the Southern Indian Peninsula.

The port is proposed at Vizhinjam, 16 km away from Thiruvananthapuram, capital of State of Kerala. Kerala being the southern most state in India beset by Arabian Sea. The proposed Vizhinjam port is just 10 nautical miles from the International Shipping Lane. The Vizhinjam port is endowed with a natural seawater depth of up to 24 m as close as one nautical mile from the seacoast. Due to this natural depth, Vizhinjam can attract the largest container vessels currently in operation and also the future mega container carriers. Site needs minimal capital dredging thus the project cost and maintenance cost will be minimum.

Advantages

Tourism Potential

Proposed Project Plan

Proposed project plan for International Container Transshipment Terminal.

Note: The above estimates are subject to revision ,in consultation with successful project partners.

Recent Developments