Vallarpadam International Container Transhipment Terminal - Phase I

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In February 2005, UAE’s DP World led consortium signed a 38 year build-own-operate-transfer (BOOT) agreement with Cochin Port Trust (CoPT) to develop a greenfield international container transshipment terminal at Vallarpadam (VICTT), in the southern state of Kerala. VICTT was designed to have an ultimate capacity of three million TEUs (twenty foot equivalent unit). Once operational, this new terminal was expected to replace the existing Rajiv Gandhi Container Terminal (RGCT) at Cochin Port and reduce India’s dependence on foreign ports to handle transshipment. As part of this BOOT agreement, DP World took over the management and operations of RGCT in February 2005 under a separate lease contract. DP World had up to ten years to transfer the operations from RGCT to VICTT. This BOOT agreement was the result of Government of India’s (GOI) commitment to encourage private investments to augment and upgrade the country’s port capacity. To this effect, GOI took several policy initiatives. Of these, the guidelines issued in October 1996 was the most comprehensive, facilitating private sector participation in the construction and operation of additional assets such as container terminals and cargo berths. DP World and its partners established India Gateway Terminal Private Limited (IGTPL) to develop VICTT. IGTPL was jointly owned by DP World (75%), Transworld Group (5%), Chakiat Agencies Private Limited (5%) and state owned Container Corporation of India (15%). DP World won this greenfield transshipment terminal by bidding the highest revenue share of 33.33% with CoPT. The other two bidders in the international competitive tender conducted by CoPT in early 2004 were namely: Maersk Sealand and a consortium of IL&FS and Punj Lloyd. The total cost of the project was estimated at US$ 500 million. The project received non recourse debt funding from a consortium of banks led by Infrastructure Development Finance Company Limited (IDFC). IGTPL planned to develop VICTT in two phases. Phase I, with an investment of US$ 200 million for a capacity of one million TEUs, was expected to be commissioned by April 2009.