MUMBAI : In a big blow to India’s biggest private port operator, state-owned Jawaharlal Nehru Port Authority (JNPA) has disqualified Adani Ports and Special Economic Zone Ltd (APSEZ) from a tender to privatise the container handling facility self-run by the port authority.
The decision, taken on Monday and communicated to APSEZ on Tuesday, is in line with a tender condition that bar firms involved in contract termination at other ports from participating. A coal handling terminal run by a unit of APSEZ at Visakhapatnam Port Authority was terminated in December 2020, a few years into its 30-year concession.
“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,” says Clause 2.2.8 of the tender conditions.
Using this tender condition, Visakhapatnam Port Authority, also state-owned, excluded APSEZ from a tender for mechanisation of West Quay berths 7 and 8 at the port in Vizag citing termination of the coal terminal deal.
On 3 March, the Andhra Pradesh High Court rejected a petition filed by APSEZ seeking to overturn its disqualification from the tender issued by Visakhapatnam Port Authority for mechanising West Quay berths 7 and 8 at the port with private funds.
APSEZ has appealed against the March 3 order of the single bench of A P high court before a division bench. The appeal is yet to be decided.
APSEZ is trying to wriggle out of the tight spot it finds itself in by arguing before the court that it was the “first” to terminate the contract, thereby averting disqualification as 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 21st October 2020. The port authority, in turn, issued a termination notice on 26th December 2020, according to court documents.
Visakhapatnam Port Authority, however, told the court it issued a consultation notice to Adani Vizag Coal Terminal Pvt Ltd (AVCTPL) on 3rd October 2020, stating that it has not complied with the contractually stipulated minimum guaranteed cargo (MGC) clause, which is a ground for terminating the contract.
A consultation notice is deemed termination, the next step is termination, the port authority said, adding that it had followed all the procedures per the concession agreement in terminating the contract.
Visakhapatnam Port Authority, according to officials briefed on the matter, had also 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.
“After long deliberations during which APSEZ was also given a personal hearing, J N Port decided on Monday to reject the firm’s application to participate in the tender,” said a person briefed on the decision, asking not to be named.
During the personal hearing, APSEZ reiterated its position that the coal terminal at Vizag was first terminated by the firm. J N Port Authority, though, was not convinced by this argument put forth by APSEZ.
“Going into the legality of the termination of the coal terminal contract at Visakhapatnam port is not in the domain or discretion of J N Port Authority. Besides, J N Port Authority does not have the liberty to question the merits of Visakhapatnam Port Authority’s decision to disqualify APSEZ from the tender for West Quay Berths 7 and 8,” the person said.
“The fact remains that the coal terminal at Vizag port was terminated. Citing this, Visakhapatnam Port Authority rejected APSEZ’s application to participate in the tender for West Quay berths 7 and 8. APSEZ has not secured a stay from the courts against its disqualification. J N Port Authority gave enough time to APSEZ to prove its case. It didn’t come up with any convincing answers. Finally, J N Port Authority rejected APSEZ’s application, going strictly as per law and by following the tender conditions in letter and spirit,” the person said.
APSEZ is expected to approach the Bombay High Court to reverse its exclusion from the tender.
A spokesperson for J N Port Authority declined to comment. APSEZ could not be reached for comment.
However, a company official confirmed its disqualification from the tender.
In a separate development in April, state-owned V O Chidambaranar Port Authority vacillated on excluding APSEZ from a tender to convert a bulk cargo berth into a container terminal at the port located in Tamil Nadu’s Thoothukudi district. The port authority was saved from a potential embarrassment as APSEZ decided not to place a price bid.
In March, Paradip Port Authority disqualified APSEZ from a tender to build a dry bulk cargo terminal at the Western Dock of the port located in Odisha, citing the issues at Vizag port.
APSEZ approached the Odisha High Court challenging its exclusion from the tender. The court allowed APSEZ to put a price bid but said that the finalisation of the tender by Paradip Port Authority would be subject to the outcome of the appeal filed by the firm in the A P High Court.