The state-owned entity operating the port in Tamil Nadu's Thoothukudi district, V O Chidambaranar Port Authority, has invited bids for the construction of a container terminal in the port's outer harbor. The terminal is intended to have a capacity of 4 million twenty-foot equivalent units (TEUs) with an investment of Rs70.55 billion. In a notable departure from the usual approach of major ports under the Union government, the criteria for awarding the 45-year deal will be based solely on viability gap funding (VGF). According to the tender documents, the project will be awarded to the bidder quoting the lowest VGF, and the VGF has a cap of Rs 19.50 billion or the actual quote, whichever is lower. An Empowered Committee in the Ministry of Finance has given in-principle approval for a VGF of Rs19.50 billion for the project. The VGF represents 27.64 percent of the total project cost, and the Union government will contribute Rs 14.11 billion (about 72 percent of Rs 19.50 billion) as VGF. The Ministry of Ports, Shipping, and Waterways/VOC Port Authority will contribute the remaining Rs 5.38 billion. The foundation stone for the outer harbor project is scheduled to be laid by Prime Minister Narendra Modi on February 28 at VOC Port. The VGF will be disbursed in two stages, with Rs 6.86 billion in the first stage and the balance of Rs 12.63 billion in the second stage. The port authority clarified that the need for VGF arises from loading the breakwater construction and capital dredging costs onto the private entity developing the project. It expressed confidence in receiving bids within the specified VGF of Rs 19.50 billion. The outer harbour container terminal project is structured similarly to the Kerala government's model for building a container transhipment port at Vizhinjam near Thiruvananthapuram. The revenue share to the port authority will be under moratorium for ten years from the contract signing date, after which it will be 1 percent of the gross revenue, increasing by 1 percent annually until it reaches 35 percent. The private operator, once awarded the deal, will have the freedom to set rates based on market forces, but the tariffs should not exceed the highest tariff at any container terminal in major ports. Revenues for the project will come from berth hire charges, container handling charges, storage charges, and miscellaneous charges. The outer harbour project will consist of two container terminals, each with a 1 km berth length, capable of handling 2 million TEUs each. These container berths are designed for vessels with a capacity of 22,000 TEUs. The construction will occur in two phases, with the first phase including breakwater, rubble bund for reclamation, capital dredging, berth/jetty construction, mechanisation, rail lines, and navigational aids, with an investment of Rs 44.94 billion.