Dubai Ports International signs agreement for Vallarpadam port development

The project was formally launched with the laying of the foundation stone by Prime Minister Manmohan Singh. The ceremony was attended by Thomas Jacob, Chairman, KoPT and Sultan Ahmed Bin Sulayem, Executive Chairman Dubai Ports. The proceedings were overseen by Minister of Shipping T.R. Baalu, Chief Minister for Kerala, Oommen Chandy and Governor of Kerala R.L. Bhatia.

Vallarpadam is the largest single-operator container terminal currently planned in India and the first in the country to operate in a Special Economic Zone(SEZ). The new terminal will make Kochi a key centre in the shipping world reducing India's dependence on foreign ports to handle transhipment. The agreement, approved by the Cabinet Committee of Economic Affairs allows DPI to manage and subsequently transfer its operations at the Rajiv Gandhi Container Terminal (RGCT) in Kochi Port to the new terminal. DPI has been granted a 38-year concession for the exclusive operation and management of the site and will share 33.33 per cent of the revenue with KoPT.

Construction is expected to be completed in four years and commercial operations to begin within a year of completion. The first phase of the new terminal will have a capacity of one million Twenty foot Equivalents (TEU) and cost approximately US$135 million. It will consist of 600 metres of quay, six Super Post Panamax Quay Cranes and an on-dock railhead serviced by rail-mounted gantry cranes. Construction of a new four-lane bridge and highway access to the 'golden quadrilateral' road network is already underway. Vallarpadam will be expanded ahead of demand to a total 1.8km of quay eventually and at least 16 Quay Cranes capable of handling the largest vessels afloat, with associated yard-handling equipment and a capacity of three million TEU.

The total cost of the project is estimated at US$500 million and will be funded by DPI through non-recourse debt funding. The debt is provided by a consortium of banks led by the Infrastructure Development Fund Company (IDFC), set up to provide growth capital for infrastructure projects in India.

With the finalisation of this agreement, DPI has taken over the management and operation of the existing RGCT facility prior to the transfer of its operations to the new terminal upon its completion. DPI will actively manage and invest in the facility focusing on improving productivity, investing in quayside and yard-handling equipment and implementing state-of-the-art I.T. systems. DPI has estimated that the total initial investment required will be approximately US$20million and includes the immediate provision of four Rubber Tyred Gantries (RTGs) and two Mobile Harbour Cranes to the Terminal - to improve yard handling, truck turnaround times and quayside operations. DPI's strategic partner, CONCOR, will hold a 15% stake in the operation and will play a vital role in providing access to hinterland business through its extensive rail network.

Strategically located on the main east-west global shipping lanes and offering drafts of about 16m, Kochi is destined to develop as the premier gateway to southern India while offering an alternative to Sri Lanka and Singapore for container transshipment.

Sultan Ahmed Bin Sulayem, Executive Chairman, Dubai Ports, commented:
"India represents a major market opportunity for DPI and we believe that our expertise and rapidly growing network will benefit the country. Our long-term commitment to India is clear. Not only are we committed to the development of a new terminal, we are investing in the existing operation at Kochi to reduce the problem of congestion and promote the port in the short term. I know that our belief in the future success of the Port is shared by our financial backers and in conjunction with our partners at KoPT and in the Government, we have worked to reduce the timescale for the transfer to the new facility. We look forward to a long and successful relationship."

Mohammed Sharaf, Managing Director, Dubai Ports International, said:
"It is important for India to capitalize on its rapidly growing economy. It needs to ensure the provision of terminals that will facilitate direct calls of main line vessels and needs to reduce the over-dependence on transshipment hubs located overseas whilst ensuring the market remains open by promoting shipping line choice, through common-user facilities. We are very proud to be involved in such an important project and look forward to working with the Government, KoPT and the shipping lines to deliver a facility that meets all these objectives."

Thomas Jacob, Chairman, KoPT said:
"We are very pleased that this agreement has been finalised with DPI. It is critical that India has terminal operations that can support its growth. DPI has demonstrated a proven track record of success and its recent expansion in Asia will benefit Kochi. We firmly believe that DPI is the right partner to ensure Kochi is at the forefront of the international shipping world and we look forward to a long and successful partnership."