The Union home ministry has allowed Essar Ports and Adani Ports to bid for the mega container terminal project in Chennai, clearing the decks for the shipping ministry to begin the process of awarding the US$724.44 million project, reported The Times.
"We have communicated with the port that the two bidders, Adani Ports and Essar Ports have been given clearance by the home ministry and the other ministries to participate in the project," a senior official of the shipping ministry said.
While Adani Ports had earlier secured the clearance, when it was the lone bidder for the project in 2011, Essar Ports had to seek clearance from the ministries of home, defence and external affairs after it merged its subsidiaries with its holding company.
This is the second time that the Chennai Port Trust is looking to award the project after it rejected a lone bid in 2011 by Adani Ports, which offered just 1.5 percent revenue share to the port.
Adani and Essar were the only companies that bid again for the project after the port asked the seven companies that were active during the qualification stage to bid.
The mega container terminal, with a capacity of 4 million TEUs, has been envisaged as the largest container terminal on the country's east coast and it will be able to handle ultra-large container vessels.
Adani Group is the country's biggest private player in the ports sector while Essar Ports is the second by market capitalisation. Essar Ports recently sold close to four percent stake in the company to Port of Antwerp for more than $31 million.
Companies such as the Dubai-based DP World, Port of Singapore Authority (PSA) and Larsen & Toubro, which bid in the initial stage, withdrew later due to various reasons. PSA could not participate due to the monopoly clause.
"We are seeing a major slowdown in the port sector with companies pulling out of projects such as those at JNPT and Haldia. Companies should be very certain about the cargo that they are likely to see at these facilities while bidding,"said Anand Sharma, director at Mumbai-based Mantrana Maritime consultancy.
As per the norms, companies submit the bids to the ports and the ports then seek security clearance for the companies from the ministries of shipping, home, defence and external affairs.
The ministry of shipping has been struggling to award projects due to various reasons and four port projects, estimated to cost about $3.9 billion, have failed to take off in Tamil Nadu, Maharashtra and Kerala over the past few months.
While the home ministry has earlier declined security clearance to various port companies such as Adani Ports, Punj Lloyd and Lanco projects have also suffered due to the refusal of the companies to go ahead after winning the bids.
The container terminal proposed to be developed north of the existing Bharathi Dock at Chennai Port will have two new breakwaters-used to reduce the intensity of waves-and a quay length of 2 km.
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