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Jawaharlal Nehru Port Trust’s fourth container terminal is readying for suitors once again. Its landlord has upped the bar this time, with higher financial muscle and prior experience necessary for qualification.
The port trust seemed to have learnt a lesson or two from its past experiences, when ABG-PSA consortium left it high and dry after placing a winning bid of 51% revenue share.
“We are only following the planning commission guidelines in this regard. This will ensure that frivolous parties should not come,” said N N Kumar, deputy chairman, JNPT. The last date for submission of request for qualification is August 19.
The recently held pre RFQ meeting was attended by the so called crème-de-la-crème of the port sector including Maersk, Port of Singapore Authority, Dubai Port World, Port of Hamburg, MSC and Adani Ports. Some say, it is only natural that the 2-km long, 2.4 million TEU capacity terminal be left for the “big boys”.
Unlike last time, when the size of the company bidding could be 100% of the project size, it has to be at least 150% of the project cost now.
However, its latest policy has sparked a debate that whether it is fair to keep smaller players out and in doing so, give one big company the capacity of what is going to be the largest container terminal in the country. For instance, ABG would find it very hard to bid this time, unless it partners a bigger player in the sector.
The port trust has earlier planned to divide the project into two which would have given an opportunity to smaller players and brought down the time of project completion from eight to four years.
“There are clearly some vested interests at play to reduce competition. First, by reducing competition and second by making the project less attractive,” a senior government official who did not wish to be quoted said. He said that the port trust is not keen on going ahead with the second phase of dredging at the 4th terminal which will increase the draft from 14 meters to 17 meters.
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“The second phase of dredging is still in evaluation stage. We are talking to our consultants if it is economically viable,” Kumar said. This could mean that larger vessels would not be able to dock at the terminal, unlike the Mundra port where the draft goes up to 17 meters.
Even with the smaller players out, the project is likely to remain vulnerable with the security deposit required to be paid by the winning company being reduced from 1% to 0.25% of the total cost. “Anyone can use it to sabotage the project and keep additional capacity from coming to the port. The neighbouring ports would stand to gain,” the official said.
To make matters worse, the bids are expected to be even lower than half of what was offered last time. “JNPT should consider itself lucky if someone quotes even 10% revenue share this time,” a senior executive of a port operating company said.
The cost of the project has gone up close to Rs 8,000 crore and with weakening rupee it can go even higher. With paucity of funds and limited credit supply, it would be difficult to live up to such financial commitment.
All things aside, considering fourth container terminal’s past, industry experts say that it would not be a big surprise, if at the end of it the matter ends up in court, keeping the project in limbo for another few years, as has happened several times before.
