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India's Cabinet Committee on Infrastructure approved on Tuesday the proposal to build a mega container terminal at the east coast port of Chennai.

According to Union Minister of Shipping G.K. Vasan the project will be developed on a design, build, finance, operate and transfer (DBFOT) basis under public-private partnership (PPP) with a concession period of 30 years.

The facility is expected to cost Rs 3,686 crore with Rs.3,125 crore being invested by the concessionaire and Rs.561 crore by Chennai Port.

The new terminal will be constructed to handle ultra-large container ships and deep draft vessels.

At present there are two container terminals at Chennai with a total capacity of 2 million TEUs per year. The mega container terminal would increase the port's capacity by an additional 4 million TEUs per year.

"It will boost import and export from the region,” said Vasan.

Chennnai port has seen a rapid increase in container volumes in recent years, which is set to continue with the development of the new mega container terminal and a 200 percent increase in TEU capacity.

Bunker companies to have benefited from the recent rise in volumes at Chennai include ChemoilAdani, which began supplying at the port in 2009, and Matrix Bharat Marine Services Pte. Ltd., which has been carrying out deliveries at Chennai - but not on a regular basis - sourcing its product from Chennai Petroleum Corporation Ltd's refinery.