Top companies evince interest in ₹7,056 crore outer harbour project at Thoothukudi re-tender.

Large companies such as Adani Ports and Special Economic Zone, DP World, Jan De Nul, Vedanta Group, JM Baxi, and DBGT have expressed interest in the ₹7,056 crore outer harbour project at Thoothukudi, following the re-tender issued in December. The project’s Viability Gap Funding (VGF) has been increased to enhance its appeal, according to sources.

Officials from these major players attended a pre-bid meeting held last week. The Request for Proposal (RFP) document stipulates that VGF will be capped at ₹1,950 crore or the actual quoted amount, whichever is lower. However, the Detailed Project Report (DPR) suggests government support for construction, including breakwater and dredging, amounting to ₹2,500 crore.

The DPR highlights that the project is marginally viable on a standalone basis due to the significant investments required for civil works such as breakwaters, dredging, and reclamation, which do not generate direct revenues. International precedents show that private investors seldom fully finance such greenfield port projects, making substantial government support essential for financial viability.

“VGF provides a one-time grant to support projects with high capital expenditure, while a longer concession period allows developers more time to recoup their investment. A moratorium on royalty payments can ease initial financial burdens, enhancing project attractiveness and sustainability in the long term,” said Jagannarayan Padmanabhan, Senior Director and Global Head of Transport, Logistics, and Mobility at CRISIL, in an earlier statement to businessline.

The VOC Port Authority reissued the RFP after the initial tender received a poor response, with only two applicants—Vedanta and Premier Science and Technology—both of whom were disqualified. The revised tender includes modified eligibility criteria to encourage broader participation, though specific details of the changes are yet to be disclosed.

The outer harbour project will be developed on a design, build, finance, operate, and transfer (DBFOT) basis. It aims to achieve a total handling capacity of 4 million TEUs (twenty-foot equivalent units) annually in two stages. The first stage, with an indicative cost of ₹4,494 crore, involves the development of Container Terminal 1 (Berths I and II), dredging, and breakwater construction. The second stage, costing ₹2,561 crore, will develop Container Terminal 2 (Berths III and IV).

The concessionaire will construct two container terminals, each with a 1,000-meter quay length, in the outer harbour. The construction period for Container Terminal 1 is 36 months, while Container Terminal 2 will take 24 months.

In terms of connectivity, the port is planning rail and road access for the project. The Concessioning Authority will provide rail connectivity up to the entrance of the Outer Harbour Container Terminals, while the concessionaire will be responsible for developing railway facilities from that point onward.

HBL