VOC Port Authority re-tenders outer harbour project under hybrid annuity model

V.O. Chidambaranar Port Authority (VOC Port), Tuticorin, has floated a fresh tender for its long-pending Outer Harbour Development Project, marking the third attempt to attract private participation. In a significant shift, the project is now being offered under the Hybrid Annuity Mode (HAM), moving away from the earlier Design, Build, Finance, Operate and Transfer (DBFOT) framework, in a bid to improve investor response.

With the change in execution model, the estimated project cost has risen sharply to ₹9,859 crore, up by more than ₹2,000 crore from the earlier estimate of ₹7,056 crore. Port officials and industry sources said the adoption of HAM—widely used in the road sector—is aimed at better risk sharing between the public and private sectors and making the project financially more viable for developers.

Under HAM, the government provides 40 per cent of the project cost during the construction phase, while the private concessionaire arranges the remaining 60 per cent. The private player is then paid through annuity payments over the concession period, reducing traffic and revenue risks. HAM combines elements of Engineering, Procurement and Construction (EPC) and Build, Operate and Transfer (BOT) models, offering greater certainty to investors.

Industry sources pointed out that the ₹18,998 crore dredging, offshore reclamation and shore protection works for the Vadhvan Port project in Maharashtra was the first port-sector project to be undertaken under HAM, setting a precedent for its adoption in large maritime infrastructure projects.

Maritime expert Rajesh Menon said HAM significantly de-risks investments for private players, as it allows for viability gap funding of up to 40 per cent of the project cost. “The likelihood of attracting investor interest is much higher under HAM. This model is typically adopted when projects fail to draw bidders under conventional PPP structures,” he said.

The Outer Harbour project has a long and chequered history. It was first announced in the Union Budget of 2013 at an estimated cost of ₹7,500 crore. However, following the change in government in 2014, policy focus shifted towards developing transshipment hubs such as Vizhinjam in Kerala, while a proposed transshipment port at Inayam in Tamil Nadu did not progress.

According to the latest tender document, the Outer Harbour will comprise two deep-draft terminals, each with a quay length of 1,000 metres and an 18-metre draft, enabling the port to handle large container vessels. The scope of work includes construction of breakwaters, rock bunds, wharves, capital dredging, offshore reclamation for backup yards, and allied onshore facilities.

The project envisages the construction of two breakwaters—a northern breakwater of around 2,000 metres and a southern breakwater of about 3,650 metres. Offshore reclamation will provide space for container storage, an in-port rail yard and other port operations.

The Centre revived the project in 2022 with an estimated cost of ₹7,200 crore, but the tender failed to gain traction, receiving bids from only two firms—Vedanta and Premier Science and Technology—both of which were disqualified. A subsequent re-tender in December 2024, with revised eligibility norms and a project cost of ₹7,056 crore, also failed to attract bidders.

With the latest HAM-based tender, VOC Port Authority hopes to overcome earlier hurdles and finally push forward a project that is expected to significantly enhance cargo handling capacity, enable the berthing of larger vessels, strengthen global trade linkages, and support India’s broader maritime and logistics growth ambitions.