The Hindu Business Line : Pipavav Port deal: Modi-Madsen meet inconclusive

A MEETING between the Gujarat Chief Minister, Mr Narendra Modi and the Managing Director, Maersk India Pvt Ltd, Mr Hans Ole Madsen, in Gandhinagar on Tuesday to sort out certain key issues relating to the acquisition of additional shares in Gujarat Pipavav Port Ltd (GPPL) by the Danish shipping and oil conglomerate from the original promoter Sea King Infrastructure Ltd (SKIL) remained "inconclusive" though State Government officials termed the discussions as "positive."

"The Chief Minister had a long meeting with the MD, Maersk India today during which the State Government put forward several options to resolve the issue of outstanding dues of SKIL on an OECF loan. Maersk has agreed to examine the options. It was a positive meeting. However, another round of meeting will be held shortly in Delhi with Dr Rakesh Mohan, Secretary, Department of Economic Affairs, Ministry of Finance, in which all the stake holders such as the State Government, SKIL and Maersk India will participate," a senior Gujarat Government official told Business Line.

The involvement of the Union Finance Ministry has become necessary to settle the dispute since the Rs 250-crore OECF loan was routed to the Pipavav Ship Breaking Project through the Union Government, he said.

The Gujarat Government had withheld approval for the sale of a 37 per cent stake held by SKIL in GPPL in favour of Maersk, which will help the global major in raising its equity holding in GPPL from the existing 12.5 per cent to about 45 per cent and gain management control of Pipavav Port. The State Government has made it clear that the approval for the management changeover will be contingent upon SKIL paying up the entire outstanding dues on the OECF loan.

As the original agreement to develop, operate and manage Pipavav Port was between SKIL and the Gujarat Maritime Board (GMB), the change of management requires a fresh approval from the GMB.

Maersk and the Nikhil Gandhi-promoted SKIL had opened an escrow account to deposit the consideration received by SKIL from Maersk towards settlement of the outstanding dues. But, the Gujarat Government has insisted on full settlement from SKIL on the outstanding OECF loan for the deal to go through since the escrow account mechanism covered only part of the old dues, the official said.

The State Government and GPPL are mired in a long-standing dispute over repayment of a Rs 250-crore loan taken by the Union Government for the Pipavav Ship Breaking Project. Though, the beneficiary of the OECF loan was Pipavav Ship Dismantling and Engineering Ltd (PSDEL), the Union Government is deducting the loan from the State Government's account.

In the absence of an agreement either between the Government of India and PSDEL or between the State Government and PSDEL for repayment of the OECF loan, the Gujarat Government is forced to repay a loan, which it had neither negotiated nor taken, the official said.