Private companies seek support to build Port of Great Nicobar

Private sector actors have been seeking a range of incentives to build the approximately 48,000 crore international container terminal on a greenfield site in Galathea Bay on the island of Great Nicobar. Targeted incentives include the hybrid annuity public-private partnership (PPP) model, in which the central government, through its arms, owns 70% of the shares while the private actor receives 30% during the construction phase.

“Given the due consideration of high investments and the strategic nature of the project, it is appropriate for the authorities to arrange for the construction of shipbuilding plants, which will increase cash flow for the grantee and provide him with construction support,” suggest proposals from the private sector, representatives of ET checked said.

This project is significant for the country as nearly 75% of India’s transhipped cargo goes to ports outside of India. Colombo, Singapore and Klang carry more than 85% of this cargo, with the Port of Colombo alone handling 45%. According to official estimates, Indian ports could save US$200-220 million in transhipment cargoes each year if the Galathea projects come about.

In January 2023, through Shyama Prasad Mookherjee Port in Kolkata, the Center invited expressions of interest in cooperation with Andaman and Nicobar Islands Integrated Development Corporation Limited to develop the Galathea Bay International Container Terminal. Ten participants responded and took part in the deliberations. Participants included Adani Ports and Special Economic Zone, JSW Infra, Royal Boskalis Westminster, Rail Vikas Nigam, Container Corporation of India and Essar Ports, among others.

According to the participants, the government should be prepared to bear the construction costs, while the operation should be left to the concessionaire. “This is necessary to reduce the financial burden on the bidder. “The government should commit to investing significant initial costs to kickstart the project,” said one of the interested companies.

Another requirement is to have a right of first refusal to develop another terminal for handling similar or different cargo at the proposed port. A tax exemption was also sought to lower the port tariff.

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