Mumbai: The Kerala government plans to build an international deepwater seaport and container transhipment terminal at Vizhinjam port at a cost of more than Rs5,000 crore to meet the rising needs of trade in the world’s second fastest growing economy.

Vizhinjam International Seaport Ltd, a company fully owned by the Kerala government, on Wednesday invited bids from local and overseas firms to develop the project in phases. The first phase costing Rs2,390 crore involves creating capacity to handle 1.8 million twenty-foot equivalent units (teus) a year. The second phase costing over Rs2,610 crore will expand the total container handling capacity to 5.3 million teus a year. A teu is the standard size of a container and is a common measure of capacity in the container business.

Gammon Infrastructure Projects Ltd, Zoom Developers Pvt. Ltd and Hindustan Infrastructure Projects and Engineering Pvt. Ltd, a firm promoted by former BPL Mobile owner Rajeev Chandrasekhar, have confirmed that they will bid for the

International appeal: File picture of Vizhinjam port. The greenfield project is designed to serve the transhipment needs of the region, and will compete with the terminal being developed at Kochi by DP World

When operational, Vizhinjam will compete with the international container transhipment terminal being developed at Vallarpadam in Kochi port by the Dubai government-owned container port operator DP World. A transhipment port or terminal typically has a depth of more than 16m where big container ships can call to load cargo arriving from smaller ports and ship them directly to destinations or to unload cargo arriving from origin ports which are then loaded onto smaller feeder ships and transported to final destinations. Because of the draft (or depth) restrictions at Indian ports, India’s container cargo is transhipped at ports such as Colombo, Singapore and Dubai. This entails extra time and costs for moving the cargo, two key factors that influence India’s competitiveness in global trade. And ports at Colombo, Singapore and Dubai are beneficiaries.

For instance, Colombo port currently handles 3.3 million teus a year and about 60% of this originates at or is destined for Indian ports.

“So, containers that should ideally have been transhipped at Indian ports are now getting transhipped at Colombo port," said Kshitiz Bhasker, senior manager (ports) at Gammon Infrastructure Projects Ltd, a unit of Mumbai-based construction firm Gammon India Ltd.

Companies have until 31 October to submit their proposals for developing the greenfield project that is designed to serve the transhipment needs of the region. The firm seeking the lowest debt support from the Kerala government will get the 30-year contract, said an official at Vizhinjam International Seaport.

This is the second attempt by the Kerala government to develop the port located 8km south of the state capital Thiruvananthapuram on India’s west coast.

A consortium comprising two Chinese firms (Kaidi Electric Power Company and China Harbour Engg. Co.) and Zoom Developers had emerged successful bidders in the global tender that was floated in 2005. But, the tender was scrapped on issues related to national security because of the involvement of the Chinese firms, one of which was also operating a port in Pakistan.

“We will definitely be interested in bidding for the project in the fresh round of tendering," said Arun Altekar, assistant vice-president, Zoom Developers.

This time around, Zoom Developers will be bidding for the project with new partners. One of them is most likely to be Portia Management Services Ltd, a wholly-owned subsidiary of Peel Ports Ltd, the second largest port operator in the UK. Gammon Infrastructure, the only other bidder in the earlier round, is looking at the project very seriously, said Bhasker.

“It is the best natural location in India with very good draft that requires no maintenance dredging at all and is close to the international shipping route. This port can easily become the deepest container port in India," added Bhasker.

Currently, Vizhinjam port has a depth of 16m that will be deepened to 18.7m to allow big container ships of 12,000 teu capacity to call for loading and unloading cargo.

The added attractiveness is that because it is owned by the state government, Vizhinjam port will be outside the ambit of the Tariff Authority for Major Ports, the tariff regulator that sets prices for cargo handling at the 12 Central government-owned major ports in the country. As a result, the private firm winning the Vizhinjam project will be free to fix its own tariffs.