Adani Ports and Special Economic Zone, Hindustan Infralog (DP World), Larsen & Toubro, Royal Boskalis, Van Oord Dredging and Marine Contractors, and Jan De Nul Dredging are among the 15 entities that have submitted expressions of interest (EoIs) for the development and maintenance of dredging, offshore reclamation, and shore protection works at the upcoming Vadhavan Port. This project will be executed under a public-private partnership (PPP) model, specifically the Hybrid Annuity Model (HAM).

Other significant participants include National Marine Dredging Company, International Seaport Dredging, Rail Vikas Nigam, Hyundai Engineering and Construction Co, Meka Infrastructure, and Vishwa Samudra Engineering. The total estimated cost for this project is Rs 206.47 billion, with the deadline for EoI submissions ending on August 30.

This marks the first time that such extensive dredging, reclamation, and shore protection works for a new Indian port will be carried out under the PPP-HAM model. On August 30, Prime Minister Narendra Modi laid the foundation stone for Vadhavan Port, which will become the 13th port under Union government ownership.

Once completed, Vadhavan Port is expected to handle 298 million tonnes of cargo, including 23.2 million twenty-foot equivalent units (TEUs). The Jawaharlal Nehru Port Authority (JNPA), which is leading the Rs 762.2 billion Vadhavan Port project, issued the EoI call in early August for the dredging, reclamation, and shore protection works.

It?s important to note that the EoI process is not a formal tender. Based on feedback and suggestions from the entities, JNPA will refine the PPP-HAM contract terms and seek approval from the Public-Private Partnership Appraisal Committee (PPPAC) before issuing bids for this crucial infrastructure work. The strong interest from leading companies is viewed as a vote of confidence in the PPP-HAM model, despite initial concerns about payment spread over a 15-year concession period. This confidence is bolstered by the solid financial standing of JNPA, which operates India's second-busiest container gateway.

Typically, port dredging and reclamation projects in India are executed via the engineering, procurement, and construction (EPC) model, where contractors are paid in stages during the project, with the final payment settled upon completion. However, under the HAM model, which is widely used in highway development, 40% of the project cost is paid in fixed installments during construction, while the remaining 60% is paid as a variable annuity over 15 years, depending on the value of assets created.

The scope of the Vadhavan Port project includes dredging the approach channel and harbour basin, reclamation of a 1,227-hectare offshore area, and maintenance of the developed area under a long-term concession. The selected developer will not have the right to collect revenue from the project or charge user fees; these responsibilities will remain with JNPA.

The successful bidder will be tasked with financing, executing, maintaining, and eventually transferring the facility to JNPA after the concession period. While JNPA will set minimum development obligations, the private sector will have sufficient flexibility to optimize the project based on market demand.

Bids will be evaluated based on the Lowest Assessed Bid Price, considering the Net Present Value (NPV) of both the bid project cost and the operation and maintenance costs during the concession period. The project will be awarded to the bidder with the lowest Assessed Bid Price, calculated using a discount rate set by the Reserve Bank of India plus 1.25%.

The basic infrastructure for Vadhavan Port, including dredging, reclamation, shore protection, breakwater construction, and connectivity, will require an investment of Rs 389.76 billion. Initially, the core infrastructure was planned to be developed through the EPC route, funded by JNPA and the Maharashtra Maritime Board (MMB). Rail and road connectivity will be handled by Indian Railways and the National Highways Authority of India.

However, the Cabinet decided on June 19 that the dredging and reclamation package, valued at Rs 177.09 billion, will be executed through a "suitably structured PPP model" with appropriate risk-sharing and financial support. The remaining infrastructure will be developed through the EPC model, with private operators of various terminal and cargo berths contributing Rs 372.44 billion to the project.

(ET)