Enayam Port

Tamil Research Institute
RAPID TECHNO-ECONOMIC FEASIBILITY REPORT FOR
DEVELOPMENT OF COLACHEL PORT AT TAMILNADU
FINAL REPORT
The financial viability of the project has been assessed by developing a discounted cash flow model using the
capital cost inputs from technical study, revenue stream from traffic and operating cost based on port
benchmarks. The tariff structure has been evolved to make the port competitive with Colombo Port. With a
project IRR of 10.8% and equity IRR 11%, it has been estimated that the project would require capital support
from the government in the form of 20-30% viability gap funding to make the project financial feasible at a target
equity IRR of 16-18%.
Key Imperatives for the success of the port
Discussions with all leading shipping liners, leading Indian and International port operators have been conducted
and other major container ports in the world have been studied to understand the 'key imperatives' for Enayam.
While, these key success factors have been analysed with the view of establishing a large competitive transshipment
port, the same factors are also applicable for attracting gateway container traffic.
Basis these discussions, the following imperatives have been identified for ensuring success:
1. Deep draft
2. Proximity to main shipping routes
3. Scale of capacity and sufficient gateway traffic
4. Sufficient feeder capacity and cost efficient network
5. Competitive port related logistics cost
6. Efficient customs approval process
7. Hinterland road and rail connectivity
8. Cheap bunkering services
The location and design of Enayam already meet the requirement of deep draft, proximity to main shipping
routes, sufficient scale of capacity and potential of gateway traffic. Government needs to take steps towards
meeting the other key imperatives for the success of the project.
Way forward
In order to decide the way forward on project structure and investment plan, it is important to keep the key
imperatives in mind. One of the key imperatives for project success will be to get the right partner on board.
Securing a large liner as an anchor investor will be crucial in getting volumes and achieving critical scale of
operations. Also, given the need to achieve high productivity, the port should be operated by an experienced
and best in class port operator. At the same time, one of the other big objectives for Government will be to
optimize financials and minimize capital cost for the project.
It is advisable that the authority engages with a few operators and main liner to understand their risk appetite
and willingness to invest at the development stage. If they are willing, the master concessionaire model can be
considered. In case, the interest is not high due to perception of high execution risks, the government can
consider the landlord model.
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