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Adani Ports deal at Haldia Dock face uncertainty over the firm’s disqualification from auctions

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KOLKATA : Syama Prasad Mookerjee Port Authority, the State-owned entity that runs the Kolkata and Haldia Docks in West Bengal, is in a “wait and watch” mode ahead of signing a concession agreement with Adani Ports and Special Economic Zone Ltd (APSEZ) to mechanise and run a dry bulk cargo handling berth for 30 years, more than six months after the firm was awarded the project.

After the port authority issued a letter of award for the project to APSEZ on 10 February, India’s biggest private port operator has been hit by multiple disqualifications from tenders issued by other State-owned port authorities citing the termination of a contract involving the firm at Visakhapatnam Port, that makes it ineligible to participate.

APSEZ had filed petitions in high courts in States where the major ports that had excluded the firm from auctions are located as well as in the Supreme Court, seeking to overturn its disqualification.

“There is a rethinking, there is wait and watch and there are so many things. The port authority is closely watching all the Court cases. A final decision is yet to be taken on the matter,” said a government official monitoring the project.

“The Syama Prasad Mookerjee Port Authority issued the letter of award to APSEZ on a date when this controversy was not there. This is the peculiarity of this case. After the controversy arose, the port authority is taking time to decide what to do,” the official said, asking not to be named because he is not authorised to speak to the media.

APSEZ’s disqualification from port tenders has delayed the signing of the concession agreement for the Haldia project. A concession agreement sets out the terms and conditions of a cargo handling contract and puts the project in motion.

Typically, major ports or those owned by the Union government such as the Syama Prasad Mookerjee Port Authority are required to sign the concession agreement for a cargo handling project with the successful bidder within 30 days of issue of letter of award.

APSEZ’s disqualification from port tenders issued by other major ports has put Syama Prasad Mookerjee Port Authority in a bind.“The port authority is looking at all the Court cases, what have the Courts ordered and what decisions were taken by the other ports. All these will be taken into consideration before taking a final call,” the official said, noting that the port authority will seek legal advice on the matter.

The project involves mechanising Berth No 2 at Haldia Dock Complex with an investment of Rs 298.26 crore to handle 3.744 million tons (mt) of dry bulk cargo.

In October last year, APSEZ emerged the highest bidder on the tender by quoting a royalty of Rs75 per ton.

Ports contracts at major ports trusts are decided on the basis of royalty per ton of cargo handled. The bidder quoting the highest royalty per ton wins the 30-year contract.

The Haldia Dock Complex deal will help APSEZ, India’s biggest private port operator, to enter West Bengal, one of the two coastal states (the other being Karnataka) where it does not have a presence. It will add to the string of 13 ports and terminals owned and run by APSEZ with a capacity to handle 562 million tons (mt) of cargo.

The berth can accommodate Panamax vessels of up to 85,000 dead weight tonnes (DWT) and an average parcel size of 28,000 tonnes.

The planned mechanized berth is designed to primarily handle all types of imported coal.

The successful bidder has the flexibility to handle coke, limestone, iron ore pellets and other suitable dry bulk cargo also at the facility.

This is in line with the current thinking in the Ministry of Ports, Shipping and Waterways to bid out dry bulk cargo berths at major ports for handling multiple commodities instead of single commodity, according to practice followed until recently. This led to the collapse of some projects due to uncertainties associated with the single commodity in the wake of government policy changes and market dynamics.

About 80 percent of the cargo to be handled at the proposed berth would be coking coal/non-coking coal, 10 percent limestone and other flux and the balance 10 percent would be other dry bulk cargo.

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