Tuticorin International Container Terminal Pvt Ltd, a unit of J M Baxi Ports & Logistics Ltd, has secured funds from the State Bank of India to achieve financial closure for converting the dry bulk cargo Berth No 9 at State-owned V O Chidambaranar Port into a container terminal with private investments.
State Bank of India is the sole lender to the project and the credit facility agreement was signed by the two entities on Friday, according to an announcement from J M Baxi Ports & Logistics.
The privatisation of Berth No 9 at the eastern coast port into a container terminal (depth of 14.2 metres) with an investment of Rs 434.17 crore will boost V O Chidambaram Port’s container handling capacity by 6 lakh twenty-foot equivalent units (TEUs) a year to 1.8 million TEUs a year.
Tuticorin International Container Terminal, a wholly owned unt of J M Baxi Ports & Logistics, had emerged the successful bidder for the project by placing the highest royalty price bid of Rs1,900.44 per TEU when the price bids were opened in August last year.
Port tenders at major ports (owned by the Centre) are decided on the basis of royalty per TEU: the entity willing to share the highest royalty per TEU with the port authority wins the deal for 30 years.
The royalty payable will rise annually in tandem with the increase in wholesale price index (WPI), a measure of costs. The terminal operator will be free to set market rates under the new Major Port Authorities Act and the model concession agreement (MCA).
The project is a part of the National Monetisation Pipeline (NMP) wherein operational infrastructure assets including port terminals will be privatised through the public-private-partnership (PPP) route.
The NMP has listed 31 cargo berths across nine of the 12 major ports for privatisation by 2025.
V O Chidambaram Port, the third largest container handler among the dozen State-owned ports, currently has two container terminals in its inner harbour, run separately by PSA SICAL Terminals Ltd (draft of 11.7 metres) and Dakshin Bharat Gateway Terminal Pvt Ltd (draft of 14.2 metres) with a capacity to handle a combined 1.2 million TEUs. The average capacity utilization of the two terminals is about 65 percent.
The two terminals handled a combined 7,81,458 TEUs or 15.4 million tonnes (mt) in FY22 compared to 7,62,000 TEUs in FY21.
Container cargo accounted for some 45 percent of V O Chidambaranar Port’s total cargo of 34.12 million tonnes (mt) in FY22.
Between April 2022 and January 2023, the containers handled by the two terminals at V O Chidambaranar Port declined to 6,15,000 TEUs from 6,56,000 TEUs a year earlier.
J M Baxi Ports & Logistics runs container terminals at Visakhapatnam port, Deendayal Port (Kandla), Haldia Dock Complex, a multiple purpose terminal at Paradip Port, container freight stations, inland container depots, bulk logistics, rail logistics (container trains), cold chain logistics and heavy project logistics.
In FY22, J M Baxi Ports & Logistics handled about 1.6 million TEUs and about 15 million tonnes (mt) of cargo, across its facilities located on India’s western and eastern coasts.
J M Baxi Ports & Logistics recently also won concessions for operating a container terminal and shallow water and coastal berths at Jawaharlal Nehru Port located near Mumbai.
The Asian Development Bank (ADB) has agreed to lend $131 million to Nhava Sheva Free Port Terminal Pvt Ltd, an equal joint venture between J M Baxi Ports & Logistics and CMA Terminals Holding, to help achieve financial closure for upgrading and operating the container terminal previously run by State-owned Jawaharlal Nehru Port Authority (JNPA).
In January, German container shipping line Hapag-Lloyd AG said it has signed binding agreements to acquire a 40 percent stake in J M Baxi Ports & Logistics for an undisclosed amount.
Hapag-Lloyd is one of the top container ship operators in the Transatlantic, Middle East, Latin America, and Intra-America trades.