ArcelorMittal, Essar tussle over Hazira port takes legal turn

Suresh P. Iyengar | | Updated on: Jul 26, 2020
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Arcelor Mittal’s Indian arm moves Gujarat High Court for transfer of license for captive port

The ongoing tussle between ArcelorMittal and Essar Group over ownership of the captive port at Hazira has taken a legal turn.

ArcelorMittal, through its Indian venture, has moved the Gujarat High Court claiming that the bulk terminal at Hazira was built for captive purpose to serve the steel plant it had acquired from the Essar group and the license should be transferred to it.

The court will have to take a decision on whether the port run by Essar Bulk Terminal Ltd (ETBL) at Hazira is a captive facility, following the acquisition of Essar Steel by ArcelorMittal Nippon Steel India Ltd (AMNS) for about ₹42,000 crore. Essar, on the other hand, says that the port was not part of the resolution process under which Essar Steel was sold to AMNS.

Earlier, AMNS had filed an application with Gujarat Maritime Board for transfer the licence in its name from Essar Bulk Terminal.

The jetty is a prime asset for AMNS to operate the 10-million-tonne-per-annum steel plant at Hazira. The company transports all the raw material from East to West Coast through the jetty.

When contacted, AMNS refused to comment.

Essar Ports views

Essar Ports denied the claim of AMNS that the terminal was part of the insolvency process.

An Essar Ports spokesperson said, “It is regrettable that Arcelor Mittal and Nippon Steel would pursue such a frivolous and legally untenable claim. ArcelorMittal has been doing this habitually but what is surprising to us is that Nippon Steel is also supporting such approach,” he said.

In fact, he said their claim is in violation of the signed agreements between the parties and is also in violation of the Supreme Court approved resolution plan submitted by them.

According to the approved resolution plan, AMNS has sought directions be given to the Gujarat Maritime Board and Essar Bulk Terminal for continuing port services at Hazira on the same terms and conditions.

“Their sole objective appears to be to profiteer unlawfully. We are confident that the judicial authorities will see through their malafides and deal with the petition accordingly,” added the Essar Ports spokesperson.

Incidentally, he said the total investment in the port has been around ₹3,200 crore and Essar Steel has invested just ₹1.30 crore.

New Gujarat policy

Incidentally, Essar Port has applied to adopt the Gujarat Government’s new port policy that encourages fresh investments and increase in traffic through the sea coast.

Under the new policy, all port terminals with excess capacity will be allowed to service non-captive cargos provided they pay a royalty of ₹60-R₹100 per tonne against the current rate of ₹10-₹30 a tonne.

Almost 10 ports with excess capacity in Gujarat including HPCL-Mittal, Birla Copper, ISGEC, Gujarat State Fertilizer Corporation, Shree Cements, Digvijay Cements have applied to adopt the new port policy of the State government.

The additional revenue by way of wharfage and premium payments from Essar Bulk Terminal alone would be over ₹2,000 crore, he said.

Published on July 26, 2020

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