Ministry asked to award one major port project in 6 months

At a recent review meeting of infrastructure ministries, Prime Minister Manmohan Singh asked the shipping ministry to award only one of the proposed two major port projects over the next six months.

It may be recalled that the union budget 2013-14 proposed to set up two major port projects, one each in Andhra Pradesh and West Bengal.

Of late, private companies developed cold shoulder in implementing projects in the port sector. Projects awarded at very high revenue share quotations have failed to progress after the successful bidder realized the project was unviable at that rate.

One of the examples is the fourth container terminal project at Jawaharlal Nehru port, where a consortium led by PSA International failed to sign concession agreement despite being awarded the project.

Last year, Kandla Port issued a termination notice on ABG Kandla Container Terminal on grounds that the firm failed to fulfill a key obligation on handling the contractually mandated minimum guaranteed volume at a container loading facility for the past three years, beginning 2008.

ABG Kandla Container Terminal signed a licence agreement with Kandla Port in June 2006 for constructing and running the container terminal with a capacity of 600,000 standard containers a year.

ABG Kandla Container Terminal had agreed to share 48.9 percent of its revenue with Kandla Port to win the contract. This is the highest revenue share quoted by a private operator in the history of IndiaÂ’s container port privatization programme that began in 1997.

A mega container terminal at Chennai port failed to receive any price bids after several deadline extensions.
In many instances, port authorities are receiving just one-two price bids, offering revenue share in the single digits.

Notable among these is a project to ramp up capacity at Haldia Dock Complex of Kolkata port with private funds worth Rs 1,710 crore. The port received only a single bid from a private firm that offered a revenue share of 1 percent.

A Rs 650-crore plan to expand container-handling capacity at Visakhapatnam port is in trouble as the lone bidder offered a revenue share of 4 percent.