The Hindu Business Line : DP World seeks Rlys nod, plans to invest $60 m in 2 Gujarat ICDs

Ahmedabad, March 24 DP World (DPW), the Dubai-based port operator with interest in Indian ports, has approached the Indian Railways seeking permission to set up two dry ports or inland cargo depots (ICDs) at Vadodara and Ahmedabad.

It plans to invest $60 million in the venture.

“We have completed feasibility studies and are engaged in talks with Indian Railways for land acquisition and various other formalities,” Mr Ganesh Raj, Senior Vice-President and Managing Director (Sub-continent) of DP World, told Business Line here.

Interestingly Inland Conware Private Ltd (ICPL), belonging to the Adani Group, is investing Rs 938 crore on setting up rail-linked ICDs at 10 places across India, that include Ahmedabad and Vadodara, for domestic and international trade.

This is part of the Rs 1,260-crore investment planned, which includes the Adani Logistics Ltd’s Rs 322-crore funds for container trains, for which it had obtained licence from the Railways and entered into a 20-year concession agreement in January 2007.

ICPL plans to develop these ICDs as logistics hubs and provide synergy with the container terminals at Mundra Port, the largest privately-run multi-product port in India.

Rights dispute

Adanis have a non-exclusive right to operate container trains and determine and collect fees from its customers.

DPW, which operates a chain of 43 ports across 22 countries (including five ports in India), is entering the ICD business with the prospect of even entering the container train operations segment.

It would be engaged in direct competition with the Adani Group in container depots and rail tranportation of containers when its plans materialise.

The Adani Group is locked in a legal dispute with DPW over the former’s attempt to get into the business of operating international container terminals independent of DPW.

The latter contends that Adani Group’s attempt to set up a second container terminal at Mundra is in violation of the agreement that the Adani Group had signed with P&O. P&O Ports, acquired by DP World last year, had paid $292 million (around Rs 1,350 crore) to the Adanis in 2003 for buying the rights to operate and maintain the first container terminal at Mundra as well as non-compete clauses.

Another agreement in 2002 prohibited the Adanis from operating a competing container terminal for 10 years anywhere in Gujarat, outside the Mundra Port, without permission from P&O Ports/DPWorld.

A third business agreement of 2003 prohibited the Adanis from operating a new container terminal facility at Mundra port until container volumes reached 1.5 million twenty-foot equivalent units (TEUs) per annum at the first terminal.

As a successor to the P&O operations worldwide, upon its takeover, DPW is entitled to all the rights enjoyed by P&O, it argued.

Strengthening DPW

According to Mr Raj, the Supreme Court has directed that all cases related to DP World in Gujarat be consolidated at Ahmedabad and hearing completed at the earliest. Asked about the second terminal at Mundra, he said it was part of the sub-concession agreement.

“We have invested $200 million at Mundra and would pursue our desire to take the second terminal as well,” he said.

Even as the fate of MICT (Mundra International Container Terminal) hangs in balance, DPW is going ahead with strengthening its position at the first Mundra terminal.

It is adding two more container handling cranes to the existing six and orders for $17-million worth of machinery are to be placed shortly for commissioning at the earliest, he said.

The second container terminal comprising two berths at the MPSEZ, also developed by the Adanis, became operational on August 24 last year.

Cargo volume for the 2006-07 fiscal year was approximately 19.8 million tonnes.

The Adanis had justified their operating the second terminal and charged the Dubai Government-owned DPW with trying to create a monopoly.

When the Adanis’ second terminal became operational, DPW challenged it in court for not transferring its assets and violating the non-compete agreement.

Takeover-hassles

While DPW, operating the first container terminal of MICT, was keen to get the Adanis-controlled second terminal as well, the latter hopes to get back the first one also.

It is waiting for the court to rule in favour of the State ports regulator Gujarat Maritime Board (GMB), which has challenged DPW’s global takeover of P&O Ports without taking it into confidence prior to takeover.

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