Security bogey set to snap Hutch port debut

The security bogey raised by the Indian government is all set to stall Hutchison Whampoa's entry into Indian ports.

Larsen & Toubro is planning to drop the Chinese giant from the consortium that wants to take up work at the Chennai and Mumbai ports.

Hong Kong-based Hutchison Port Holdings (HPH), a wholly-owned subsidiary of Hutchison Whampoa, has not yet received security clearance from the Indian government for participating in the Rs 1,200-crore offshore container terminal project at Mumbai port and the Rs 500-crore container terminal project at Chennai port. HPH is the management contractor for both the projects, while L&T is the lead contractor.

Sources close to the development said: "L&T will drop HPH as the management contractor if it fails to obtain a security clearance soon. L&T is also planning to rope in Manila-based International Container Terminal Services Inc as an alternative management contractor in case HPH fails to get the clearance". When contacted, L&T executives declined to comment on the issue.

Significantly, the government had extended the bidding deadline for the container terminal projects at Mumbai and Chennai ports to June 15 from May 10, the ninth time that this has occurred.

HPH was earlier debarred from bidding for the third container terminal project at Jawaharlal Nehru Port Trust because of its Chinese connection and the potential threat to marine installations in Mumbai and Chennai.

Meanwhile, frustrated with the continuing delay, the bidders for the container terminal projects at Mumbai and Chennai ports have threatened to back out.

"The delay in the security clearance will gradually kill the project. There is no security concern as the Coast Guard is taking appropriate measures to ensure that. Moreover, if Chinese vessels can work at Indian ports and Chinese personnel can work at these sites, what is the harm in allowing Hutchison to participate in the projects? Besides, Chinese companies are already operational in the Indian telecom industry," the sources added.

The owners of HPH include Fidelty Management, PSA of Singapore, Templeton Institutional Funds and Merrill Lynch. HPH recently sold its 20 per cent stake to Port of Singapore Authority, which is the port unit of the Singapore government's investment arm, Temasek Holdings.