SINGAPORE : PSA International Pte Ltd, a unit of Temasek Holdings Pte Ltd, the sovereign wealth fund of Singapore, will be ineligible to participate in tenders floated by India’s State-owned major ports for three years after V O Chidambaranar Port Authority issued a termination order on its terminal unit operating at the Southern port, citing default in payment of royalty dues.
“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 a standard clause in all the tenders issued by Centre-owned major ports for cargo handling contracts.
It is, however, not clear whether the termination order issued by VOC Port Authority on 8 June on PSA-Sical Terminals Ltd, 51% owned by PSA International, will bar the Singapore-based global port operator from the bidding process for privatisation of the container terminal self-operated by Jawaharlal Nehru Port Authority (JNPA).
JNPA sources said that PSA will not to be excluded from the tendering process in which it is one of the prequalified bidders because the termination order of VOCPA on PSA-Sical came “after the bid due date”, implying that the “event” that triggers the ban occurred after bidding groups, including PSA, were technically qualified to move to the next stage of the auction.
By taking this stand, JNPA is seeking to distinguish a bid qualification criterion based on the timing of the event -before or after- that attracts disqualification.
Some port experts don’t see merit in this stand of JNPA by pointing to the fact that the tender process for the project is yet to be concluded as the price offers have not been called from the shortlisted bidders.
“From that perspective, it warrants disqualification of PSA from the JNPA tender,” said an industry expert tracking the ports sector.
PSA’s participation in the JNPA tender while it is contractually mandated to build another one km of berth length by 2024 to add to its already operational berth of one km at the port located near Mumbai has surprised the port industry.
Bharat Mumbai Container Terminals Pvt Ltd (BMCT), the wholly owned unit of PSA that runs the terminal at JNPA, has started work on the second phase of the facility that will add 2.4 million twenty-foot equivalent units (TEUs). When the second phase expansion is completed, BMCT will have a capacity to handle 4.8 million TEUs a year.
PSA-Sical Terminals owes royalty dues of some Rs1,027 crores to VOCPA, a default that led the port authority to serve the termination order on 8 June after multiple legal petitions brough by the Singapore entity failed.