On October 30, the port authority cancelled a six-month long tender for the project after the two groups that filed initial bids failed to qualify for the project.

The tender terms have been kept unchanged from the previous attempt to conform to a government stand that the project parameters approved by the cabinet and the tender conditions can be changed only after two attempts turn futile. This view was revealed by a senior government official during a road show in Mumbai earlier this year during the first attempt in which bidders raised several concerns on the project structuring and cost estimates.

“We are at a take-off point where these things will happen and I will assure you that anything that takes to make such projects work we have built in the necessary provisions in the sanction orders which enables us to be more flexible,” the official had said.

“So, if the sum total of all the industry representative’s opinions is that some things need change, and due to that we have a problem in getting the bids that we expected, then we’ll go back to the drawing board, there is no hesitation in doing that. We have been given that authority to go back to the drawing board and look at what can be changed but for that we need one cycle to go through,” he had said.

“If some other model is to be brought in including viability gap funding (VGF) spread over some more period or longer phases or even in some cases we have been looking at the Hybrid Annuity Model (HAM) like in the case of the Vadhvan port, we might bring in more changes but for that we need suggestions from the industry which can be looked at, though there will be constraints on what we will like to do,” he had said.

The fact that potential bidders were not enthusiastic about the project was evident right from the start after the tender was floated in February this year.

During a road show in Mumbai in March and the subsequent pre-bid meetings, potential bidders drew the attention of the port authority on concerns over what they cited as “unrealistic” cost estimates worked out by the VOC Port Authority with the help of the National Technology Centre for Ports, Waterways and Coasts (NTCPWC) under the Indian Institute of Technology Madras (IITM) on dredging and break water construction. The National Technology Centre for Ports, Waterways and Coasts, the technology arm of the Ministry of Ports, Shipping and Waterways, was hired on nomination basis by VOC Port Authority to write the Detailed Project Report (DPR) for the mega project.

While IIT Madras has been providing technical services to VOC Port for many years, this was the first time it wrote a “commercial proposal” for the port, covering traffic forecast, cost estimate, financial analysis and viability, among other things.

“The tender result shows that the advice given by IIT Madras has hurt VOC Port. The port authority has lost investors’ confidence in the project due to unmarketable and non-bankable PPP proposal based on the advice given by IIT Madras which potential bidders felt was unreliable,” a port industry source said.