“With capacity control, we will gain price control in the region”

Adani Ports and Special Economic Zone Ltd (APSEZ) said its planned container transshipment terminal at Colombo Port will not “cannibalize” the company’s currently being constructed facility in Vizhinjam, Kerala, as the two terminals are will complete.

India’s largest private port operator aims to control around 50 percent of the region’s container transshipment capacity with the two terminals.

The Vizhinjam facility is designed to reduce India’s dependence on Colombo, resulting in additional delays and costs for exporters and importers. Each year, around 3 million twenty-foot equivalent (TEU) freight containers bound for India are transhipped at ports in neighboring countries, according to government estimates. Colombo, Singapore and Port Klang process over 85%, with Colombo alone processing around 2.5 million TEUs.

“Phase 1 by the end of 2023”

APSEZ will begin construction in December of the 1,400-meter-long berth at Colombo West Container Terminal, with a loading capacity of 3.8 million TEUs, at a cost of approximately $ 650 million .

“We expect the first phase to be completed by December 2023,” Karan Adani, managing director of APSEZ, told analysts on the second quarter earnings conference call.

The Colombo terminal is expected to process at least one million TEUs in its first year of operation and grow from there given the port’s capacity constraints, Adani said.

The first phase of Vizhinjam is also expected to be operational by December 2023, he said.

“Between Vizhinjam and Colombo, both will attract transshipment volume. In fact, rather than cannibalizing, the two will complement each other, ”said Karan Adani.

‘Additoinal’

“Our strategy is actually to control capacity in both regions. Together we would control about 50% of the transshipment capacity there. And, as this region develops, as the south-east develops, between Vizhinjam and Colombo, the volume of transshipment is destined to increase and we expect that by controlling the capacity we would be able to control the price equally at both ends and develop the activity. So it’s complementary, not competing in nature, ”he said.

Construction, including the breakwater, of the new port of Vizhinjam is underway, and the berth and rescue yard are 90 percent ready, he said.

“We expect that the first phase, with a length of 400 meters of berth, will be commissioned by December 2023,” said Karan Adani.

Quoting force majeure Events, Adani Vizhinjam Port Pvt Ltd, the APSEZ unit that is developing the port, has requested a five-year extension from the government of Kerala to complete construction and start operations.

According to the concession contract signed on August 17, 2015, the port was to start its activities on December 3, 2019 which could be postponed to August 3, 2020.

Adani Vizhinjam Port initiated arbitration proceedings to resolve the dispute.

Karan Adani said the construction delay was mainly on the breakwater side due to the unavailability of stones.

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