Chennai firm looking for operator to run Karaikal container terminal

Chennai firm looking for operator to run Karaikal container terminal

Infrastructure development firm MARG Constructions Ltd, which is developing an all-weather deep-water sea port at Karaikal in Puducherry, is in talks with specialists in container terminal operations to manage and operate a container terminal at the port.

G.R.K Reddy, managing director of the Bombay Stock Exchange-listed firm, wouldn’t elaborate on the talks.

The Chennai-based company had signed an agreement with the government of Puducherry in 2006 to develop and operate a new port at Karaikal for 30 years, in phases, with a capacity to handle more than 10 million tonnes a year of cargo.

The first phase of the port, costing Rs416 crore, will start operations in October 2008, with two common berths to handle coal and general cargo, including containers. The two berths will have a depth of 14m, enabling ships with a cargo carrying capacity of 60,000 tonnes to call for discharging and loading cargo. In the second phase, the depth at the channel and at the berth will be increased to 16m, allowing ships with a cargo carrying capacity of 100,000 tonnes to call at the port. The port will have an exclusive berth to handle container cargo in the second phase of its development.

MARG has tied-up funds for the first phase of the project including a Rs302 crore loan from a consortium of local banks led by Indian Bank. The lending consortium includes Oriental Bank of Commerce, State Bank of Hyderabad, Corporation Bank, Allahabad Bank and the India Infrastructure Finance Co.

Karaikal port is located on the Tamil Nadu-Puducherry coast, 250km south of Chennai port and 360km north of Tuticorin port. Currently, goods originating from and bound for central Tamil Nadu are transported over long distances by rail/road to either Chennai, Tuticorin or Ennore ports from where they are shipped to their final destinations.

Being a port owned by the state government, the private developer MARG will have the freedom to set tariffs for the services provided at Karaikal port without consulting a regulator. In comparison, the tariffs for the 12 Union government-owned major ports, including the ones located at Chennai and Tuticorin, are set by a tariff regulator, the Tariff Authority for Major Ports.

The container cargo traffic at Indian ports is expected to grow to 12.5 million twenty-foot equivalent units (teu) by 2011-12, according to the Union shipping ministry. A teu is the standard size of a container and is a common measure of capacity in the container business.

Out of this, 93% or 11.7 million teu are expected to be handled by the 12 Union government-owned major ports. Together, these 12 ports handled 5.43 million teu in the 12 months to March. The balance will be handled by ports such as Karaikal, Mundra and Pipavav.