THIRUVANANTHAPURAM, 17 May 2008 — The consortium led by Hyderabad-based Lanco Kondapalli Power Pvt. Ltd. (LKPPL) has won the contract for Rs.80 billion Vizhinjam Deepwater Container Transshipment Terminal Project, claimed to be India’s first mother port.

“The qualifying group quoted Rs.350 million less in debt support and the bid selection committee headed by the chief secretary selected this consortium,” state port minister M. Vijayakumar said.

Lanco Infratech Ltd., Hyderabad, and Pembinaan Redzai Sdn Bhd, Malaysia, are other partners of the consortium that will build and operate the port in the next ten years, paying a total fee of Rs.1.15 billion.

The state government will also hold 24 percent stake in the joint venture to be formed with the consortium that will enjoy concession for running the port.

“We hope to finalize the deal within seven months since we need the Cabinet approval and federal security and environmental clearances. The first phase of the project is to be built in three years at a cost of Rs.23.9 billion after signing the contract,” Vijayakumar told reporters here.

Vizhinjam is a natural port just 16 km from the city, which is located close to the international ship route and it is expected that at least 50 percent of the nearly 20,000 vessels that pass through the route every year are expected to anchor at Vizhinjam.

Besides its proximity to the international shipping route and east-west shipping axis, availability of 20-meter contour within a nautical mile off the coast are cited among the major advantages of the port.

Once fully functional, Vizhinjam could be a serious competitor from India to the ports of Colombo, Singapore and Dubai for transshipment. Water depth of 16 meters at berth, to be increased to 18.7 meters gradually, would allow vessels of up to 12000 TEUs to anchor. This together with a design capacity of 1.1 million TEUs going up to 4.1 million TEUs would serve the transshipment needs of the region.

Dubai Ports World is developing India’s first international container transship terminal in Kochi on a build-operate-transfer (BOT) basis under a 33-year concession awarded in 2005.

It is estimated that India could save more than $100 million a year from transshipment if done on its own soil.

The state government has incorporated a company, Vizhinjam International Seaport Limited (VISL), with Chief Minister V.S. Achuthanandan as its chairman and senior ministers and bureaucrats on its board of directors mainly to provide external support.

“We hope to attract a major slice of the global transshipment business in the region once the first phase is completed. The project would also trigger the state capital’s development in a big way,” the minister said.

“The deepwater port needs minimal littoral drift along the coast and therefore hardly require any maintenance dredging. Rapid Environmental Impact Assessment (EIA) revealed that there are no significant environmental or social issues,” he said.

The project structured in public-private partnership (PPP) format is envisaged in three phases. The port would have two breakwaters of 1.5 km and six km with harbor basin and wharfs.

There would be about 30 berths, most of which would be capable of handling mother vessels. When completed, it would be capable of handling 6.5 million TEUs (20-foot equivalent unit) of containers and the state claims that it would be the deepest in the world capable of handling bigger vessels.

“Engineering consultants and project managers RITES, entrusted with the job of identifying the alignment for road and rail connectivity to Vizhinjam, will submit its report by the end of this month, after which we will start work on land acquisition and related works,” VISL’s chief operating officer L. Radhakrishnan said. “We’re looking for an alignment which needs evacuation of the minimum number of people. The external infrastructure will be set up as soon as possible,” he added.

“A container shipment economics study says that Vizhinjam will cut down the cost of operations compared to other ports for containers from and to hinterland locations as well as main locations,” say industry analysts.

The state government had to go for re-tendering last year after the federal government declined permission to a consortium citing security reasons because of the presence of Chinese in it.