Vizhinjam port

Subject : Geography

Section: Economic geography

Context: Congress fight for credit over the Vizhinjam port

What is the Vizhinjam International Seaport Project:

It is a transshipment deepwater multipurpose seaport project is being built by Adani Ports and SEZ Private Limited in Vizhinjam near Thiruvananthapuram, Kerala,
The project follows the design, build, finance, operate, and transfer (DBFOT) model, which is a type of Public-Private Partnership (PPP) arrangement.
In the DBFOT model, a private partner takes on various responsibilities, including designing, building, financing, operating, and eventually transferring the project to the public sector.
This model is typically used for large-scale infrastructure projects, where the private partner receives a concession from the public sector to manage and operate the project for a specified period, typically ranging from 20 to 30 years.
At the end of this period, control of the project reverts to the public entity that initially granted the concession.
According to the agreement for this particular project, Adani Group is expected to invest Rs 2,454 crore, and an additional Rs 1,635 crore will be secured from state and central governments as viability gap funding.
The Kerala government has also contributed by providing 500 acres of land for the project.
The DBFOT deal encompasses a 40-year duration, with provisions for possible extensions of up to 20 years.

What are the features of the Vizhinjam port:

Vizhinjam port is India’s first international deepwater transshipment port.
Some of the special features are:
Unique Depth: Vizhinjam boasts a natural depth of over 18 meters, expandable to 20 meters, making it capable of accommodating large vessels and mother ships.
Versatile Purpose: The port is designed to handle container transshipment, multi-purpose, and break-bulk cargo. It is strategically located just ten nautical miles from the international shipping route.
Low Maintenance: The port has minimal littoral drift and requires minimal maintenance dredging, reducing operational costs.
Competitive Advantage: Vizhinjam aims to compete with transshipment hubs like Colombo, Singapore, and Dubai. It is expected to reduce container movement costs to and from foreign destinations.
Initial Capacity: The first phase of the project has a capacity of one million TEU (twenty-foot equivalent units), which can be expanded to 6.2 million TEU.
Job Opportunities: The project is expected to create 5,000 direct job opportunities, support industrial growth, and boost cruise tourism.
Advanced Infrastructure: Vizhinjam offers state-of-the-art automation and infrastructure to handle Megamax container ships efficiently.

Why India needs a container transshipment port:

India currently has 13 major ports, but lacks the infrastructure to handle ultra-large container ships effectively, leading to the transshipment of about 75% of cargo at ports outside India, including Colombo, Singapore, and Klang.
In the fiscal year 2021-22, India’s total transshipment cargo amounted to approximately 4.6 million TEUs, with roughly 4.2 million TEUs being managed at foreign ports.
Developing a transshipment hub in India is expected to yield several significant benefits, including forex savings, increased foreign direct investment, enhanced economic activity at Indian ports, the growth of associated logistics infrastructure, job creation, improved operational efficiency, and an increase in revenue share.
The establishment of a transshipment port can also lead to the growth of various related businesses, such as ship supplies, ship repair, logistics services, warehousing, and bunkering.
A deep water container transshipment port has the potential to capture a substantial portion of the container transshipment traffic currently diverted to ports like Colombo, Singapore, and Dubai, ultimately contributing to India’s economic development and creating numerous job opportunities.