The government plan to construct thirty-five cargo consolidation and distribution centres linked to multiple modes of transportation or MMLPs (Multi-modal logistics parks) across significant locations is struggling to attract investors. Due to unfavourable terms and conditions, private investors shouldn’t bid. Of the 35 Multi-modal logistics parks being developed under the PM GatiShakti NMP (National Master Plan), only one such logistics park at Mappedu near Chennai in Tamil Nadu’s Thriuvallur district has been awarded so far with Mukesh Ambani-led Reliance Industries limited clinching the deal through a competitive bid last November.
Due to unfavourable terms and conditions, private investors shouldn’t bid
At least 3 multi-modal logistic parks were put to tender by the NHLM limited (National Highway Logistics Management), at Bangalore, Indore/Pithampur and Nagpur, and are yet to be finalised even after giving multiple extensions of time and a slew of concessions to prospective bidders. The tender for building a multi-modal logistics park in Bangalore is currently undergoing a rebid after a botched first round. NHAI (National Highway Authority of India), is India’s highway development agency. According to Cyril Amarchand Mangaldas, Partner and Head of the projects & financial institution business, the amount of capital expenditure that a private party is wanting to invest is quite considerable. Restricted large players as a result have not attracted much attention. He added that it is still unknown whether the model will provide any challenges for the parties in setting up the multimodal logistic parks and that the contractual structure needs to be operationally validated.
At least 3 multi-modal logistic parks were put to tender by the NHLM limited
Multi-modal logistic parks should have sufficient captive cargo to succeed, which is building logistics parks on its own land at a few locations. That aside, the technical and financial criteria stipulated by the National Highway Authority of India for prospective bidders are turning out to be a deterrent. The multi-modal logistic park is a mega project with bidding confined only to those who are financially strong, strategically placed in the logistics business segment and have a thorough understanding of the market dynamics involved in creating a logistics park will help you and other supporting stakeholders benefit as much as possible.
The multi-modal logistic park planned near Chennai attracted only 3 investors – Reliance Industries Limited, Prakash Asphaltings & Toll Highways limited of this, Prakash Asphaltings & Toll Highways was disqualified due to technical difficulties, the two industry giants had to compete, and Reliance Industries won.
The National Highway Authority of India cancelled the contract and requested a new round of bidding, with an extended deadline from January 16 to February 9.
The investors have voiced worries over liabilities relating to competing facilities, wherein any infringement on behalf of the Authority should be treated as a default event, making the authority responsible to pay per the terms thereof. Bidders also sought a 20-year exclusivity period compared to the twenty years offered by the National Highway Authority of India. Potential bidders for the Bangalore Multi-modal logistic park wanted the govt to declare it as a “Project of National Importance” so that all related benefits such as Capital Investment Subsidy, Electricity duty exemption, and GST exemption from other state and central dues would be extended to the project. The National Highway Authority of India did not agree to this demand from bidders.
The investors also sought the Authority to pay them Rs. 1000 per day in additional damages for every 1000 square metres (or portion thereof) of the right of way that was delayed for longer than 180 days after the scheduled date.