After fighting for nearly two years for its right to bid for the fourth terminal at the Jawaharlal Nehru port, APM Terminal has finally backed out of the tender.

Mr Hans-Ole Madsen, Vice-President at APM, who is responsible for the groups' business developments in India, Middle East and Africa, said that after studying the tender documents, they found the project financially unviable.

In a telecon with Business Line , Mr Madsen explains why the group decided not to bid for the project.

You have been fighting for your rights to bid for the JN port terminal for nearly two years. After winning the case, you have decided to withdraw from the tender. Why?

That is one way of looking at it. The other way of looking at it is that we did qualify but we were not allowed by the authorities to bid. That was a challenge because we believed it was our right to bid. Unfortunately, these legal things take time. After a period and all the way to the Supreme Court, they gave us the right which we believed we had from day one.

We only got that reassurance a couple of weeks back. Our formal receipt of the ruling was the time we got the tender documents. Before that, the tender documents had not been released to us because we were not qualified. Once we got the relief, we were deemed qualified and then we got the tender documents. After studying the documents, reading the terms and conditions and after looking at the financial modelling we had to conclude, as quickly as we could, that the terms and conditions did not appear to be financially viable.

You have been running a terminal at JN port, so you would have an idea of the project and the content of the tender documents?

We had an idea of what the construction costs would be. But what we did not know is that according to the new TAMP rules, when some tender is given out, then TAMP calculates and decides the starting tariff. The way TAMP works today is that you set a starting tariff based on an estimated cost of the project going by some calculations they have. The tender document did not allow for an upward revision of the starting tariff. So in-principle you had to accept escalating costs but the revenue side was not increasing accordingly. And, therefore, you cannot have a financially viable business model.

You have a good idea about the costs but you do not know about the revenue side then you cannot do the business modelling. We were informed about the revenue side, that's the starting tariff, only when we got the tender document.

What are your plans for GTI now? Is it possible to expand capacity there?

In GTI we are close to having done everything we can to expand. We have from day one, invested in a different yard and additional cranes. Because of the size of the terminal, it is not possible to expand any further. We can try and improve our productivity but in terms of physical space and equipment we are limited by the length of the berth.

What are your plans for the Indian market?

It is a disappointment for us that we were unable to make a financial business case out of the JNPT project because we were very interested in that project. We will continue to invest in India. We have also provided feedback in a proper way explaining what in our opinion has to be revisited in the tender document. We still hope that it will be revisited and if it is revisited then we will be very much interested to look at that project again.

Apart form that, we continue to look at a number of early stage opportunities and are hopeful of finding one on either the east coast or the west coast of India. In addition, we will continue to invest in our own consortium at Pipavav.

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