The Hindu Business Line : Maersk-Concor bid gets nod from Shipping Ministry's finance wing

THE Finance Wing of the Shipping Ministry has cleared the highest bid submitted by the Maersk-Concor consortium for developing a new container terminal at the Jawaharlal Nehru Port involving an investment of over Rs 1,000 crore.

"The Finance Wing has cleared the Maersk-Concor bid. It will now require the Shipping Minister's approval. Only then can a letter of intent (LoI) be issued to the highest bidder," a Ministry official said.

However, the process of issuing the LoI to the Maersk-Concor consortium will also require the Election Commission's (EC) clearance.

So, technically, the Government has not awarded the project to the highest bidder, though the Maersk-Concor team had emerged the highest bidder with a revenue share of 35.503 per cent, the Ministry said, refuting the statement made by Mr Sharad Pawar, leader of the Nationalist Congress Party (NCP) on Wednesday. Explaining the factual position, the Ministry has said that JNPT had forwarded to the Shipping Ministry for approval the recommendations of its board of trustees for award of the contract on BOT basis to the Maersk-Concor consortium as required under Section 42 (3) of the Major Port Trusts Act, 1963.

"As a measure of abundant caution, we have approached the EC with a request to accord clearance to the Ministry for processing the proposal of JNPT to award the contract to its finality, which is awaited," a Ministry official said. As per its price bid, the Maersk-Concor team will have to share 35.503 per cent of its annual operating gross revenues with the port trust, which would be calculated on the scale of rates fixed by the Tariff Authority for Major Ports (TAMP).

For calculating the revenue share, the discounts/rebates in tariff, if any, offered by the private operator to the users will be ignored.

Besides, Maersk-Concor will have to pay an upfront fee of Rs 15 crore at the time of signing of the License Agreement. It will also have to pay separate lease rentals annually to the port trust as per the scale of rates for the assets and licensed premises of the port trust.

"The revenue share offered by Maersk-Concor was the highest among the four qualified bidders and the bidding process was carried out through a open competitive tender route. The Shipping Ministry and the JNPT are satisfied that the revenue share of 35.503 per cent submitted by Maersk-Concor is reasonable especially in view of the fact that this cannot be passed on to the users of the terminal," the official said, refuting accusations made by Mr Pawar that the Government and the port trust were getting a raw deal since the revenue share was a "pittance".

The Ministry also said that adequate safeguards to address concerns over national security have been built in the License Agreement proposed to be signed between the port trust and the successful BOT operator. The Cabinet Committee on Security (CCS) had cleared all the parties who had participated in the bidding process for the project along with their consortium partners, including the Maersk-Concor consortium, the Ministry stated while responding to Mr Pawar's claim that national security has been compromised while awarding the contract to the highest bidder.