With this, P&O will emerge as the strongest private sector port operator in the country with the company already operating the Nhava Sheva International Container Terminal at the Jawaharlal Nehru Port Trust and bagging the Rs 300-crore container terminal project at Kandla. The company is also the sole bidder for the Rs 600-crore container terminal at Vallarpadam, near Kochi port.

Others in the fray for the Chennai terminal were Hutchison Port Holdings of Netherlands and Port of Singapore Authority (PSA) Corporation. However, PSA opted out of the race.

An empowered committee, headed by R Vasudevan, secretary (shipping), ministry of surface transport, had offered non-negotiable terms to the three shortlisted bidders after the Cabinet Committee on Economic Affairs (CCEA) had on February 1 cleared the project. The terms pertained to labour levels and throughput at the terminal. The final selection was based on the maximum financial return, in the form of royalty, to the Chennai Port Trust.

The bidders were given the option of revising their financial offers, which were submitted earlier and were lying sealed, in the light of the non-negotiable terms. PSA did not revise its bid while P&O ports quoted about 37 per cent and Hutchison bid at 27 per cent. Though the terms offered by the ministry are non-negotiable, the contract signing is likely to be delayed since P&O has some reservations over clauses of guaranteeing minimum traffic.

Besides Vasudevan, others on the committee included expenditure secretary, environment secretary and industry secretary. The 3 mt capacity container will be constructed on build, operate, transfer (BOT) basis. The contract will include both developing and managing the terminal for a 30-year period. Construction is scheduled to be completed in two years.

The private operator is required to ensure at least 30 per cent of the total container traffic at the terminal in the third year of operation should be non-transshipment cargo. The condition is being levied in order to see that the facility develops as a hub port.