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Tuticorin box terminal conversion: 8 in fray, but key bidders may stumble on ‘contract breach’ clause

P Manoj Mumbai | Updated on August 24, 2021

Adani, PSA, JSW, Essar and J M Baxi Group among those in contention

Eight leading groups have filed initial bids on a global tender for converting a bulk cargo berth at the Centre-owned VO Chidambaranar Port Trust into a container terminal.

These include Adani Ports and Special Economic Zone Ltd (APSEZ), PSA International Pte Ltd, DP World Ltd, JSW Infrastructure Ltd, Essar Ports Ltd and International Cargo Terminals and Infrastructure Pvt Ltd (JM Baxi Group). Other bidders for the public-private partnership (PPP) project include Bothra Shipping Services Pvt Ltd and a joint venture between Bollore Africa Logistics SAS and India Ports and Logistics Pvt Ltd, multiple sources said. The privatisation of Berth No 9 into a container terminal with an investment of ₹434.17 crore will boost VOC Port Trust’s container handling capacity by 6 lakh twenty-foot equivalent units (TEUs) a year to 1.8 million TEUs.

India Ports and Logistics is 51 per cent owned by Star Ports Ltd, a unit of Mumbai-listed Starlog Enterprises Ltd (earlier known as ABG Infralogistics Ltd), with Bollore Africa Logistics holding the balance. It runs the Dakshin Bharat Gateway Terminal Pvt Ltd, one of the two container terminals at VOC Port Trust.

‘Key eligibility condition’

But, sources said, the qualification of APSEZ and Bollore Africa Logistics-India Ports and Logistics consortium could be blocked by a key eligibility condition stipulated in the tender.

“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,” according to the tender conditions.

Also read: VOC Port sets record by unloading 57,090-tonne coal in one day

Adani Vizag Coal Terminal Pvt Ltd (AVCTPL), a unit of APSEZ which runs a facility in Visakhapatnam Port Trust (VPT), has initiated termination on mutual consent as per right under the concession agreement. VPT has also issued counter-termination of the contract, APSEZ had said in a recent disclosure to the stock exchange.

AVCTPL and VPT have appointed arbitrators as well as the presiding arbitrator. During the quarter, AVCTPL filed a statement of claim with the arbitration panel. The matter is under arbitration and sub judice,” APSEZ said in a filing to the Bombay Stock Exchange as part of its April-June quarterly earnings announcement.

‘Contract breach’

On the other hand, some state-run port authorities have terminated the concessions awarded to joint ventures involving ABG for contract breaches that have ended in litigations. For instance, Haldia Bulk Terminals Pvt Ltd (HBT), a joint venture between Mumbai-listed ABG Infralogistics Ltd and French shipping group Louis Dreyfus Armateurs SAS, walked out of the contract at the Haldia Dock Complex (HDC) just two years into its 10-year contract.

Visakhapatnam Port Trust terminated the concession awarded to the same consortium for development of EQ7 berth to handle fertilizers citing tardy progress in implementing the project. Further, the same team abandoned the contract for developing and operating a multipurpose cargo berth at WQ6 in Visakhapatnam Port Trust.

A bankruptcy court in Mumbai has initiated insolvency proceedings against Tuticorin Coal Terminal Pvt Ltd on a petition brought by Bank of India seeking to recover unpaid dues of ₹90.87 crore after the facility was “abandoned” by the same partnership. The terminal owes some ₹355.79 crore to a clutch of seven banks led by Bank of India.

Published on August 24, 2021

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