Chinese-built cranes to revolutionize operations at Vizhinjam Port in India

Chinese-manufactured cranes are poised to assume a critical role in the loading and unloading operations at the Vizhinjam multi-purpose and container transshipment port in Kerala, which falls under the management of Adani Ports and Special Economic Zone (APSEZ). This development adds an intriguing dimension to the Indian government’s 2020 decision to limit the utilization of Chinese-made equipment in publicly funded infrastructure projects across India.

Adani Ports and Special Economic Zone has recently placed an order for eight rail-mounted quay cranes and twenty-four cantilever rail-mounted gantry cranes with Shanghai Zhenhua Heavy Industries Co (ZPMC), the world’s largest port crane manufacturer. The precise cost of this procurement remains undisclosed, as per individuals familiar with the matter. These cranes are scheduled to arrive in multiple shipments at Vizhinjam, where they will undergo installation and rigorous testing before being put into service once the port commences its operations.

Rail-mounted quay cranes, also known as ship-to-shore cranes, play a crucial role in efficiently handling cargo containers on and off ships.

The construction of the Vizhinjam multi-purpose and container transshipment port, the first greenfield port project initiated in India in over a decade, is receiving support in the form of viability gap funding (VGF) amounting to Rs 16.35 billion. This grant, requested by the winning bidder, Adani Ports and Special Economic Zone, will be evenly contributed by both the Indian government (Rs 8178 million) and the Kerala government (Rs 8171.8 million).

It’s worth noting that on July 23, 2020, approximately two years after tensions escalated between India and China along their border, the Indian government imposed restrictions on vendors and service providers from countries sharing a land border with India (without explicitly naming China) in tenders for public procurement. This decision was part of a non-tariff economic blockade against China, aimed at strengthening defense and national security. These restrictions applied to autonomous bodies, Central public sector enterprises, and public-private-partnership (PPP) projects receiving financial support from the government or its affiliated organizations. However, this policy only affected new tenders for public procurement and had no impact on private-sector procurement.

Importantly, the Vizhinjam port project remains unaffected by the government’s order regarding equipment sourcing from China during public procurement tenders. This exemption is due to Adani Ports and Special Economic Zone placing the crane order with ZPMC in 2018, two years before the implementation of these restrictions. This foresight helped the project avoid complications in its delivery timeline, which had already faced delays due to various factors. The Vizhinjam port project aims to reduce India’s dependency on the nearby Colombo port for cargo container handling.

Chinese cranes are in high demand among port and terminal operators worldwide due to their competitive pricing and rapid delivery following order placement.

It’s worth noting that Indian security agencies have previously subjected Chinese port cranes to stringent scrutiny when terminal operators procured equipment for their facilities. Instances of port contracts becoming embroiled in legal disputes have occurred after the government denied security clearance for the installation of Chinese cranes, particularly near naval command centers. Furthermore, Indian government policy prohibits Chinese firms or entities with Chinese ties from investing in and operating ports and terminals within the country, owing to strained political relations between India and China.

In a strategic move to counter China’s growing influence in the region, India secured a port contract at the crucial Colombo port through a government-to-government framework approximately two years ago. Under the leadership of Prime Minister Narendra Modi, the National Democratic Alliance government nominated Adani Ports and Special Economic Zone to construct the West Container Terminal in the Colombo port, set to commence operations in December 2024.

In September 2020, a few months after the government imposed restrictions on Chinese vendors and service providers, India Ports Global, the entity responsible for developing and operating the India-funded Chabahar port in Iran, terminated a contract with ZPMC for the purchase of four rail-mounted quay cranes intended for installation at the Persian Gulf-based port in Iran. This cancellation resulted from delays by the crane manufacturer in fulfilling the order, citing hesitancy from foreign banks to open a letter of credit, which guarantees payment to the supplier, despite a sanctions waiver granted by the US for the Chabahar port project.

These delays in erecting the quay cranes at the Chabahar port have affected the official commencement of the ten-year contract. Nonetheless, India and Iran have initiated operations, albeit on a short-term, annual contract basis, even within the zero period.

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