KOLKATA: The Syama Prasad Mookerjee Port Authority, the state-owned entity that runs the Kolkata and Haldia Ports in West Bengal, is in a “wait and see” mode before signing a concession agreement with Adani Ports and Special Economic Zone Ltd (APSEZ) to mechanize and run the ports. dry bulk cargo handling for 30 years, more than six months after the firm was awarded the project.
After the port authority issued a letter of award for the project to APSEZ on February 10, India’s largest private port operator was hit with multiple disqualifications from tenders issued by other Government-owned port authorities citing termination of contracts involving firms at Visakhapatnam Port, which made it not eligible to participate.
APSEZ has filed a petition in the high court of the country where the main port that has exempted the firm from the auction is located as well as in the Supreme Court, seeking to overturn its disqualification.
“There is rethinking, there is wait and see and there are many things. The port authority closely monitors all Court cases. A final decision is yet to be taken on the matter,” said a government official monitoring the project.
“The Syama Prasad Mookerjee Port Authority issued an award letter to APSEZ on the date of this controversy. This is the peculiarity of this case. After the controversy arose, the port authority took time to decide what to do,” said the official, who asked not to be named because he was not authorized to speak to the media.
APSEZ’s disqualification from the port tender has delayed the signing of the concession agreement for the Haldia project. The concession agreement sets the terms and conditions of the cargo handling contract and sets the project in motion.
Normally, major ports or those owned by the Union government such as the Syama Prasad Mookerjee Port Authority are required to sign concession agreements for cargo handling projects with successful bidders within 30 days after the award letter is issued.
APSEZ’s disqualification from port tenders issued by other major ports has put the Syama Prasad Mookerjee Port Authority in a bind.
“The port authority is examining all Court cases, what has been ordered by the Court and what decisions have been taken by other ports. All these will be taken into account before making the final call,” the official said, noting that the port authority would seek legal advice on the matter.
The project involves the mechanization of Berth No 2 at Haldia Dock Complex with an investment of Rs 298.26 crore to handle 3.744 million tonnes (mt) of dry bulk cargo.
In October last year, APSEZ emerged the highest bidder in the tender by quoting a royalty of Rs75 per tonne.
Port contracts at major port trusts are decided on the basis of royalties per tonne of cargo handled. The bidder who quotes the highest royalty per ton wins the 30-year contract.
The Haldia Dock Complex deal will help APSEZ, India’s largest private port operator, to enter West Bengal, one of the two coastal states (the other being Karnataka) where it does not have a presence. It will add to the network of 13 ports and terminals owned and operated by APSEZ with the capacity to handle 562 million tonnes (mt) of cargo.
The berth can accommodate Panamax vessels of up to 85,000 dead weight tons (DWT) and an average package size of 28,000 tons.
The proposed mechanized port is designed to handle all types of imported coal. The successful bidder has the flexibility to handle coke, limestone, iron ore pellets and other suitable dry bulk cargoes at the facility as well.
This is in line with the current thinking in the Ministry of Ports, Shipping and Waterways to bid for dry bulk cargo berths at major ports to handle multiple commodities rather than a single commodity, as was the practice followed until recently. This led to the collapse of several projects due to the uncertainty associated with single commodities following changes in government policy and market dynamics.
About 80 percent of the cargo to be handled at the proposed berth is coking coal/non-coal, 10 percent limestone and other fluxes and the remaining 10 percent is other dry bulk cargo.