The Hindu Business Line : Decks cleared for Chennai port to identify bidder for box terminal construction

WITH the Madras High Court vacating an interim injunction obtained by Chennai Container Terminal Pvt Ltd (CCTL) against developing a second container terminal in Chennai port, the decks have been cleared for the Chennai Port Trust (ChPT) to identify a bidder to construct the terminal.

The second terminal will be a competing facility to the present one being run by CCTL.

"It is not in the interest of the trade and industry for CCTL to maintain its monopoly. We are happy that the ChPT took up the matter against CCTL and decided to go ahead with the second terminal," said a port user.

Another user said that the entire import and export trade through the port was severely affected due to non-existence of a competing facility. The container throughput in the port increased by more than 300 per cent during the last ten years, and by 23 per cent during the last year to 6.16 lakh TEUs (twenty foot equivalent units). Further, there were frequent labour problems in the terminal that affected the trade. These factors necessitate a second terminal, he said.

The CCTL, in an affidavit before the Court, said that calling for global bids for the second terminal was in violation of the terms contained in the licence agreement signed between the company and the ChPT on August 9, 2001. In the agreement the ChPT had admitted to hand over to CCTL not only the container terminal with the berth length of 290 metres, which was then under construction, but also the iron ore berth in the port with a quay length of 222 metres, with an approximate back up area of about 3.20 lakh sq m. But for the assurances given that additional area would be made available in the port for extending the container terminal, the promoters of CCTL (P&O Ports) would not have agreed for payment of royalty as high as 37.128 per cent and to make huge investment as has been done by the company pursuant to the licence agreement, CCTL said.

It was strange that in the invitation of global bids neither CCTL nor its shareholders and associates were entitled to bid for the second terminal. By barring the company from participating in the proposed bid it was clear that the intention of the ChPT was not to hand over the iron ore berth to CCTL to extend the container terminal, and to establish the second terminal without participation and involvement of CCTL and its associates. This is clearly in breach of the terms and conditions of the licence agreement, the CCTL said. In its counter, the ChPT said that it was free to operate competing facilities if the licencee (CCTL) achieves 80 per cent or more of the guaranteed throughput for three consecutive years at any point, after the date of commercial operation. The container terminal was handed over to CCTL on November 30, 2001. The extended terminal was handed over to them on August 19, 2002. The CCTL not only reached the guaranteed throughput but also surpassed the quantum mentioned in the concession agreement.

As regards the iron ore terminal, the licence agreement did not prescribe any time limit for handing over the same to CCTL. It was also made known to CCTL that the iron ore berth would not be handed over by the port trust up to 2008 by a letter dated July 15, 2004 and this fact has been deliberately suppressed by CCTL, the ChPT said.

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