MIDDLE EAST

DPI looks to Vallarpadam

22 years ago

Indias Cabinet Committee on Economic Affairs has given the nod to Dubai Ports International (DPI) to take over management of the Rajiv Gandhi Container Terminal (RGCT) at the port of Kochi (Cochin) on the understanding that it goes ahead with construction of a proposed new transhipment terminal at Vallarpadam as soon as possible. Under the initial 30-year concession agreement, DPI will commence operations at RGCT for a period not exceeding ten years. However, if traffic at that terminal reaches 400,000TEUs, it will be incumbent on the concessionaire to switch operations to a greenfield site at Vallarpadam. If, after eight years and three months, traffic has not reached the agreed figure, DPI would be allowed to walk away from the contract after ten years.

Industry observers in India were worried that DPI might decide to keep traffic below the agreed threshold level and simply make profits from the existing installation, although this will no longer be possible.

It is dubious whether such a tactic could have succeeded.

RGCT handled throughput amounting to 169,965TEUs in 2003-04, but is seriously constrained by its 414 metre long quay and a height limitation of 45 metres imposed by the Navy on quayside gantry cranes.

Furthermore, with limited yard space, a throughput of 400,000TEUs would be difficult to achieve.

DPI has already made it known that making money from such a limited operation is not really viable and would therefore like to move operations to the new site within three to four years, but this is highly dependent on the port trust investing the $201.68m needed to upgrade road, rail and waterway links to the new site.