The Hindu Business Line : L&T disqualified for Kandla port project — `Request for proposal' document norms not met

LARSEN & Toubro, which has been trying to foray into full-fledged port terminal operations, appears to have lost one more chance. Being one of the five companies which had bid for the Rs 200-crore container terminal project at the Kandla port, L&T has been disqualified by the port, as the company did not meet certain requirements stipulated in the Request for Proposal (RFP) document, informed sources told Business Line.

With the disqualification of L&T, only three companies — ABG Heavy Industries Ltd, Afcons and Gammon India — remain in the race, as the fifth company had earlier been disqualified.

As per the revised schedule drawn up by the Kandla port authorities, the pre-bid meeting for any clarifications would be held later this month, with the last date for submission of technical and financial bids having been fixed for August 2. The bids for the project would be opened by the end of the first week of August, according to the sources.

Earlier, P&O India, which operates the Nhava Sheva International Container Terminal (NSICT) at the Jawaharlal Nehru port and the Chennai container terminal at the Chennai port, had shown interest in the project.

But prolonged negotiations between P&O and Kandla port over certain alterations in the concession agreement came to a cropper, leading to the withdrawal of the container terminal operator about two-and-a-half years ago.

When contacted, a senior official of the Kandla port confirmed the disqualification of L&T, as it did not meet "certain investment criteria" stipulated in the RFP document.

The condition that L&T could not meet envisaged the bidder to form an SPV (special purpose vehicle) for executing the project, with the bidder, either on its own or through its subsidiaries, having a controlling stake in the SPV.

The Kandla port has proposed to realign the container terminal project and have it constructed and operated on BOT (build-operate-transfer) basis on berth no 11 and 12, which have a combined quay length of 545 m and a draft of 12.5 m alongside the berths. The berth no 12, which is at present being developed, is expected to be ready for use by the end of October 2005.

As per the fresh plan drawn up by Kandla port, the selected bidder will be required to commission full-fledged container handling operations at berth no 12, with at least two new rail mounted quay cranes (RMQCs), within 24 months of the signing of lease agreement.

However, the selected party will have to commence container-handling operations at berth no 11, which is ready for use, within 8 months of the signing of the agreement, with adequate number of RMQCs and mobile harbour cranes as specified in the agreement.

Trade analysts however point out that the nearly three-year delay by the port in the implementation of the project has clouded its financial prospects, especially with progress made by the Mundra and Pipavav ports in the neighbourhood to get into the container business.

In fact, analysts are not sure now whether the new Kandla terminal could bring in the projected traffic of 0.5 million TEUs. The analysts feel that the Kandla port's projection of 1.5 lakh TEUs in the first year and 4.50 lakh TEUs in the fifth year of operation may be on the higher side, going by the present movement of containers in that region.