JNPT terminates $1.5b terminal deal with PSA
The Jawaharlal Nehru Port Trust has scrapped a contract awarded to a consortium of Singapore's PSA International and India's ABG Ports for constructing a new container terminal worth US$1.5 billion and will invite fresh bids for the project.
The port also encashed the bid security amount provided by the consortium and asked the ministry of shipping to blacklist PSA and ABG from participating in any port projects in the country, reported The Economic Times.
"We have already encashed the bid security amount of $12.4 million provided by PSA and have decided to terminate the contract," a senior official at JNPT said. "We will now seek a re-tender for the project.''
The termination notice will have a validity of 90 days as per the existing laws and PSA can choose to hold talks with the port during the period.
"But we are sure that they do not want to come back and discuss this matter. They wanted to delay this project indefinitely to help their business in Singapore," a JNPT board member said. "We will also make some amendments to the tender when re-bidding is invited.''
PSA International, one of the largest port operators in the world, is owned by the Government of Singapore. The company operates port terminals in Chennai and Tuticorin and holds stakes in two other terminals in India.
JN Port, the largest container port in the country, has three terminals — two run by private parties and one by the port trust.
PSA had asked for more time to sign the concession agreement, nearly a year after the company was awarded the project.
A concession agreement usually has terms for development, construction, financing, operation and maintenance of the facility.
The consortium of PSA and ABG was awarded the contract last September after they offered more than 51 percent revenue share to the port, the highest ever in the port sector.
If the project had gone ahead, PSA's investment of more than $1.2 billion in the project would have been the largest foreign direct investment in the domestic port sector.
In January, JNPT finalised the agreement, but had to postpone it after PSA said it would not pay the stamp duty registration charges.
Later in April, ABG sought approval to move out of the consortium, delaying the project indefinitely.
"There are many large companies willing to invest in the fourth terminal project, but we are not sure if they will offer a high revenue share as PSA did," said the JNPT board member.
ABG Ports said it is unaware of any plan by JNPT to blacklist it. "We are not aware of the decisions taken at the board meeting," a spokesperson said.
The construction of the container terminal was planned to help ease out the congestion trouble that the port faces as it functions at more than 110 percent of its capacity.
The entire process of re-tender will take at least two years going by the pace at which the port functions. During this time, most of the cargo will go to other ports on the west coast such as Adani Ports, Pipavav and Hajira," said Anand Sharma, director of Mantrana Maritime Advisory.