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The Victorian Government, Australia, is now a step closer to tender the 50-year lease contract for the port of Melbourne.

The Government aims to raise approximately A$6 billion (US$4.31 billion) from the sale of the port's lease. The Government plans to use the funds to remove 50 railway level crossings.

In a significant development, the Labor party has agreed to dramatically water down a controversial clause exposing the state to a compensation payment to the future owner if a rival port is built that undercuts its business.

In a late concession today the government agree to a demand of the opposition that a compensation regime to the private concessionaire only applies for 15 years from the day the port is sold, ensuring it will expire in about 2031.

Government had until today insisted the compensation regime should apply for 15 years from the point at which a new rival port is built. 

The latest offer also includes a clause ensuring that a future rival port is not operating under more favourable economic terms than the Port of Melbourne.

The Port of Melbourne is Australia's largest container port, accounting for up to 35 per cent of Australia's container trade. It is located in Melbourne,Victoria, and covers an area at the mouth of the Yarra River, downstream of Bolte Bridge, which is at the head of Port Phillip, as well as several piers on the bay itself.

In mid August 2014 the state of Victoria appointed financial advisers Morgan Stanley and Flagstaff Partners to manage the transaction. Minter Ellison was also appointed as legal adviser for the transaction. 

Since 1 July 2003, the Port of Melbourne has been managed by the Port of Melbourne Corporation, a statutory corporation created by the State of Victoria.

We have recently reported on several port PPP projects globally:

• Shimoni Port PPP project - Kenya
• Tecon Sepetiba container terminal in the state of Rio de Janeiro - Brazil
• Terminal concession at Porto do Açu - Brazil
• Karaikal Port PPP project - India
• Posorja port PPP project - Ecuador
• Port of Colombo - East Container Terminal PPP - Phase II - Sri Lanka
• Corazal Container Terminal PPP project - Panama Canal