Over 10 EoIs received, in talks with more interested bidders for Great Nicobar port

Subject: Geography

Section: Places in news

Context:

“At least” 10 EoIs (Expression of Interest) have been received for the proposed ₹48,000 crore trans-shipment port project at Galathea Bay in Great Nicobar Island off the Bay of Bengal.

Details:

Reportedly the government would look at a PPP mode via the landlord model, or a hybrid annuity model could also be considered because of the high nature of investments.

About the Project:

The Great Nicobar port is to be developed in four phases with a total capacity of 16 million tonnes of container cargo handling, per year.
The proposed container shipment hub is supposed to be located strategically between Singapore and Colombo – two major trans-shipment ports on the international sea trade/shipping route.
The Great Nicobar Port will act as a feeder port to these two; apart from itself being a trans-shipment port to shipments from Bangladesh and Myanmar.
The majority of India’s transshipped cargo is handled in ports outside of the country with Colombo port handling the majority of international transshipped cargo.

Trans-shipment port:

When goods have to be offloaded at an intermediate port and loaded onto a different ship to make its onward journey to its final destination, it is called trans-shipment. The port or port where it is offloaded to take the connecting vessel is called the trans-shipment port.
The Vizhinjam Port located in Vizhinjam, Kerala, is developing this deep-sea water port as India’s first Mega Transshipment Container Terminal.

Feeder port:

A feeder vessel is a vessel that “feeds” large ocean vessels with containers.
A feeder port is a port where large ocean vessels normally don’t go. Partly because there are not enough containers to load onto a large ocean vessel or because the port is not large enough to handle the large ocean vessels.
The central government is planning to develop Puducherry port as a feeder port for Chennai Port.

What is the Landlord Model of Port?

In this model, the publicly governed port authority acts as a regulatory body and as a landlord, while private companies carry out port operations—mainly cargo-handling activities.
Here, the port authority maintains ownership of the port while the infrastructure is leased to private firms that provide and maintain their own superstructure and install their own equipment to handle cargo.
In return, the landlord port gets a share of the revenue from the private entity.

The Hybrid Annuity Model (HAM):

In India, the new HAM is a mix of Build-Operate-Transfer (BOT) Annuity and Engineering, Procurement and Construction (EPC) models.
As per the design, the government will contribute 40% of the project cost in the first five years through annual payments (annuity).
The remaining payment will be made on the basis of the assets created and the performance of the developer.
Here, hybrid annuity means the first 40% payment is made as fixed amount in five equal instalments whereas the remaining 60% is paid as variable annuity amount after the completion of the project depending upon the value of assets created.
As the government pays only 40%, during the construction stage, the developer should find money for the remaining amount. Here, he has to raise the remaining 60% in the form of equity or loans.
The private developer will recover his investment from the government by receiving annuity payments over a period of 15 years.
The government also offers 80 per cent of prior land acquisition and forest clearance in such projects to the developers.
There is no toll right for the developer.
Under HAM, Revenue collection would be the responsibility of the National Highways Authority of India (NHAI).