Adani Ports in for more trouble as Paradip Port Authority disqualifies it from dry bulk terminal tender

In more trouble for Adani Ports and Special Economic Zone Ltd (APSEZ), State-owned Paradip Port Authority has disqualified the firm from a tender to build a 25-million tonne (mt) capacity, dry bulk cargo terminal at the port located in Odisha at an investment of ₹2,392.13 crore.

Paradip Port Authority disqualified APSEZ on March 10, multiple officials said. This move came a week after a single judge bench of the Andhra Pradesh High Court upheld the decision by Visakhapatnam Port Authority, also State-owned, to exclude APSEZ from a tender for mechanisation of West Quay Berths 7 and 8 at the port in Vizag citing termination of a coal terminal run by India’s biggest private port operator there.

A standard tender condition followed by all State-owned major ports says that “An Applicant including any Consortium Member or Associate should, in the last three years, have neither failed to perform on any contract, as evidenced by imposition of a penalty by an arbitral or judicial authority or a judicial pronouncement or arbitration award against the Applicant, Consortium Member or Associate, as the case may be, nor been expelled from any project or contract by any public entity nor have had any contract terminated by any public entity for breach by such Applicant, Consortium Member or Associate”.

Visakhapatnam Port Authority, according to officials briefed on the matter, had communicated to other State-owned ports details on the termination of the coal terminal run by APSEZ at Vizag and the firm’s disqualification from the West Quay Berths 7 and 8 tender.

But other ports that have issued tenders for privatisation of cargo berths in which APSEZ had applied, did not take a call on excluding it so far.

“Once a court order has come, State-owned ports have to abide by it,” a government official said, referring to Paradip Port Authority’s decision to disqualify APSEZ from the bid. “Other State-owned ports will also take the same course of action,” he added.

Paradip Port Authority has also filed a caveat in the Odisha High Court, saying that it should be heard before passing an order if APSEZ were to file a petition to reverse its disqualification, the official said.

APSEZ has appealed against the March 3 order of the single bench of AP high court before a division bench.

APSEZ is trying to wriggle out of the tight spot it finds itself in on the plea that it was the “first” to terminate the contract, thereby averting disqualification per tender condition.

The firm told the A P high court that it had issued a termination notice on Visakhapatnam Port Authority for the coal terminal contract on 21 October 2020. The port authority, in turn, issued a termination notice on 26 December 2020.

The port authority, though, claimed that Adani Vizag Coal Terminal Pvt Ltd (AVCTPL), which ran the coal terminal, “never met the performance standards pertaining to minimum guaranteed cargo (MGC) stipulated in the concession agreement in any of the 6-7 years it ran the facility”.

“Material non-conformance of performance standards per the concession agreement is proven in the coal terminal project, which is a cause for termination and disqualification from future tenders,” the port authority submitted.

The port authority told the court it issued a consultation notice to AVCTPL on 3 October 2020 stating that it has not complied with the MGC clause. A consultation notice is deemed termination, the next step is termination, it said, adding that it had followed all the procedures per the concession agreement in terminating the contract.

COMMENT NOW