Deendayal Port Authority set to scrap multipurpose cargo berth tender

16 Nov 2023 CW Team

Discussions between the Ministry of Ports, Shipping, and Waterways and the Deendayal Port Authority have centred on the potential restructuring of the project in phases following the cancellation of the current tender, which has faced multiple extensions. The current structure of the greenfield project, with an 18.33 million-tonne cargo capacity, is deemed unlikely to succeed due to substantial investments in an uncertain market, according to a source.

JSW Infrastructure Ltd, the ports unit of JSW Group, was the sole entity to express preliminary interest, but even they eventually withdrew, citing conditions for participation. The upcoming meeting with the Minister of Ports, Shipping, and Waterways on November 17 will address this project among the 12 state-owned major ports.

Concerns have been raised about the demand, with industry experts speculating that potential bidders stayed away due to reduced demand. Additionally, Adani Ports and Special Economic Zone Ltd's existing dry bulk cargo terminal at Tuna Tekra, with a 14 million-tonne capacity, further raises questions about the necessity of the proposed project.

Legal constraints prevent the Deendayal Port Authority from guaranteeing coal cargo diversion to the Tuna Tekra project, as it operates as a public port. Global conflicts and the trend of shifting from break-bulk to containerised cargo pose additional challenges to the project's viability.

Despite these challenges, the government remains committed to the project and aims to explore options to attract bidder interest. The port authority, overseeing India's largest state-owned port, floated a new tender on June 30, seeking private investment in building the multipurpose cargo berth through a public-private partnership (PPP) for a 30-year period.

Kandla port plays a crucial role in serving the Northern India hinterland, and the proposed facility aims to address the growing dry cargo traffic and the over-utilisation of existing infrastructure. The projected traffic gap, estimated from FY 2021 to FY 2030, indicates a need for additional facilities, designed to handle various cargoes, including food grains, fertilisers, coal, ores, minerals, and steel. The new berth is planned to accommodate ships up to 100,000 deadweight tonnes (DWT) with a draft of up to 15 meters.

The Deendayal Port Authority, a state-owned entity managing the port in Kandla, Gujarat, is likely to cancel a tender for building a multipurpose cargo berth at its Tuna Tekra satellite facility with private funds amounting to Rs 17.1922 billion. This decision comes in the wake of insufficient bidder interest, marking the second cancellation in 15 months. Multiple sources suggest that a fresh tender will be floated after restructuring the project. Discussions between the Ministry of Ports, Shipping, and Waterways and the Deendayal Port Authority have centred on the potential restructuring of the project in phases following the cancellation of the current tender, which has faced multiple extensions. The current structure of the greenfield project, with an 18.33 million-tonne cargo capacity, is deemed unlikely to succeed due to substantial investments in an uncertain market, according to a source. JSW Infrastructure Ltd, the ports unit of JSW Group, was the sole entity to express preliminary interest, but even they eventually withdrew, citing conditions for participation. The upcoming meeting with the Minister of Ports, Shipping, and Waterways on November 17 will address this project among the 12 state-owned major ports. Concerns have been raised about the demand, with industry experts speculating that potential bidders stayed away due to reduced demand. Additionally, Adani Ports and Special Economic Zone Ltd's existing dry bulk cargo terminal at Tuna Tekra, with a 14 million-tonne capacity, further raises questions about the necessity of the proposed project. Legal constraints prevent the Deendayal Port Authority from guaranteeing coal cargo diversion to the Tuna Tekra project, as it operates as a public port. Global conflicts and the trend of shifting from break-bulk to containerised cargo pose additional challenges to the project's viability. Despite these challenges, the government remains committed to the project and aims to explore options to attract bidder interest. The port authority, overseeing India's largest state-owned port, floated a new tender on June 30, seeking private investment in building the multipurpose cargo berth through a public-private partnership (PPP) for a 30-year period. Kandla port plays a crucial role in serving the Northern India hinterland, and the proposed facility aims to address the growing dry cargo traffic and the over-utilisation of existing infrastructure. The projected traffic gap, estimated from FY 2021 to FY 2030, indicates a need for additional facilities, designed to handle various cargoes, including food grains, fertilisers, coal, ores, minerals, and steel. The new berth is planned to accommodate ships up to 100,000 deadweight tonnes (DWT) with a draft of up to 15 meters.