JNPT’s fourth terminal decision on PSA-ABG bid this week

Monday, 26 September 2011 00:00 - - {{hitsCtrl.values.hits}}

The fate of the single largest foreign direct investment in the Indian port sector by Singapore’s PSA will be known by this week.

The Board of Trustees of the Jawaharlal Nehru Port Trust will have to take a decision on awarding the contract for its fourth container terminal by next weekend as the validity of the bids expire on 30 September.

The consortium of Singapore’s PSA International and ABG Port in India had emerged as the highest bidder agreeing to share more than 50 per cent of the revenue with the Government.

But, the JNPT could not award the contract as, at the board meeting convened for it last month, some of its trustees had raised doubts over the performance of ABG at Kandla port in Gujarat where it is operating a terminal jointly with PSA.

Following this, the port trust had set up a committee, headed by its Deputy Chairman to study the performance of ABG at Kandla. It is learnt that the committee will present its report to the board at its next meeting.

A JNPT official said the board will meet to take a decision on the PSA-ABG bid. JNPT’s move to seek a performance review of the local partner of PSA after it became the highest bidder has raised questions on the very principle of the tender process.

Price bids were accepted only after due diligence on the bidders. In fact, the port trust had enough time to examine the past performance of the bidders and their background as the tender process prolonged due to legal issues. JNPT trustees were reportedly concerned over the below par performance of ABG at Kandla Port where it has been operating a container terminal since 2007.

PSA has a 49 per cent stake in the Kandla terminal. At the fourth terminal at the JN port, ABG will be a minority partner holding 26 per cent stake and PSA the majority. According to news reports, the Ministry of Shipping has advised the JNPT to award the contract to the highest bidder.

The PSA-led consortium has offered to share more than 50 per cent of the revenue, the highest at any port in India where private parties are operating container terminals.

The port trust’s decision to go in for a review of the performance capability of ABG has further delayed the project by over a month, which as such was held up by over an year due to legal issues.

JN Port, which handles more than 50 per cent of the country’s container traffic, has three operating terminals — NSICT - run by DP World of Dubai, Gateway Terminal operated by APM Terminals and the port’s own terminal. These are working beyond their installed capacity. Yet, the port has been facing congestion, forcing shipping lines to impose surcharge.

Port users allege vested interest behind the last-minute review of the performance of the highest bidder. Call any of them; you will hear either of these stories:

One, PSA-ABG consortium overbid and is trying to wriggle out.

Two, competitors are trying to delay the project to take advantage of the increasing traffic and to divert cargo to their own terminals at other ports.

If the board of JN Port trustees, who are concerned over the performance capability of ABG, vote against it at the board meeting, the project will be delayed further.

(The Hindu Business Line)