The Kerala Government Cabinet, on Wednesday, decided not to accept the tender of Welspun-led consortium for the port operator contract of the Vizhinjam International Container Transhipment Project. The contract will be re-tendered after getting the environmental clearance.

Chief Minister Oommen Chandy told the media after aCabinet meeting that the government had held discussions with the consortium, and had come to the conclusion that re-tendering of the contract at a later stage would be advantageous to the government. At the same time, the government would go ahead with the preparation of the master plan and tendering of contract for engineering, procurement and construction of the basic infrastructure for the project.

The Chief Minister said that the cancellation of the present tendering process would not affect the project’s progress . Environmental impact assessment would be completed soon. The government also would move for incorporation of 20 per cent viability gap funding from the Centre in the project. If the Centre made minor changes to the criteria, the project would become eligible for the funding provided by the Centre for infrastructure projects.

Besides, the State would press the Centre for changes in the cabotage law. Though its demand for the change in the law would be primarily for the Vallarpadam Container Terminal, it would also benefit the Vizhinjam project. These would attract better offers for the port operator contract when it is re-tendered.

Welspun consortium had emerged as the sole bidder for the port operator contract after a competing consortium failed to get security clearance. The government’s efforts to persuade the company for major reduction in the grant sought by the company for operating the port for 30 years were not successful. (The consortium had agreed to reduce the net present value sought as grant from the government to Rs.399.5 crore. They had originally sought Rs.479.5 crore).

The revised estimated cost of the project is Rs.4,010 crore of which Rs.3,040 crore is to be spent by the government. Of this, governmental expenditure for basic infrastructure development would be Rs.1,646 crore.

Minister for Ports K. Babu said that the State government’s equity contribution to the project would be Rs.1,030 crore. About Rs.800 crore would be provided by HUCO and IIFCL as equity and Rs.810 crore would be raised as government bonds while Rs.300 crore would be advanced by a bank consortium led by State Bank of Travancore.

The Minister said that though the tender had been cancelled, ongoing master planning and preparation of tender documents for building infrastructure would continue. As per the decision in 2010 to develop the port on the Land Lord model, construction of breakwater, dredging and reclamation would also be undertaken by the government. (Originally, the government was to provide only road and rail connectivity, water supply and power infrastructure.)

He said that the studies started last year, as part of environmental impact assessment, had been completed on June 30. Now, the reports prepared by the accredited agencies are to be compiled and published. It would be submitted for approval by the expert committee after public hearing.