Standard Post with Image

SC Dismisses DP World Petition on Scrappedjn Port Auction

  • The Supreme Court on Tuesday dismissed a petition by DP World Pvt. Ltd challenging Jawaharlal Nehru (JN) port’s decision to scrap an auction in 2009 to develop and operate a new Rs.600 crore container loading facility.Global port operator DP World, majority-owned by the Dubai government, was one of the two shortlisted bidders.The Union government-controlled port, India’s busiest container harbour, scrapped the auction for the contract on a direction from the shipping ministry following a poor response from bidders. JN port has since retendered the project, in which three groups have been shortlisted. These include DP World, Group TCB SL- Eredene Capital Plc, and Sterlite Industries India Ltd-Leighton Contractors (India) Pvt. Ltd.
  • The apex court verdict will not affect DP World’s participation in the fresh tender, where it is a prequalified bidder.“The writ petition has been decided in favour of JN port. The petition filed by DP World was dismissed by the Supreme Court today,” said S.K. Kaul, chief manager looking after legal and administration at JN port.The verdict will likely help the port expedite plans to boost much-needed capacity. It will also clear the decks for it to proceed with the stalled auction process by asking the shortlisted bidders to put in price bids for the project, Kaul added.
  • DP World declined to comment, saying it was yet to receive a copy of the court’s order.Shipping industry executives said JN port’s decision to scrap the earlier auction because of limited competition (only two bidders in the fray) did not make sense because a retendering attracted only one more bidder but delayed the project by four years.JN port plans to develop, through private investments, a small container terminal with a berth length of 330m—half the typical length of 650-700m— with a capacity to handle 600,000 standard containers a year.
  • The port, located near Mumbai on India’s western coast, handles around 57% of India’s container cargo passing through its harbours.In the year ended March 2011, JN port handled 4.27 million standard containers, operating at more than its designed capacity of 3.6 million standard containers a year.JN port has three container-loading facilities—one run by the government-owned port, and another two run separately by DP World and a joint venture between APM Terminals Management BV and Container Corp.of India Ltd.On 8 February, India’s tariff regulator for ports controlled by the Union government cut rates by 44.28% at Gateway Terminals India Pvt. Ltd, the facility run by APM Terminals at the port.
  • Experts reckon Gateway Terminals may reduce the container-handling capacity at the terminal to the minimum level stipulated in the 30-year licence agreement signed with JN port to deal with the rate cut.Between April 2011 and January 2012, Gateway loaded 1.6 million standard containers, more than the minimum guaranteed throughput of 1.3 million standard containers a year.“JN port needs capacity very badly and quickly,” said a Mumbai-based executive director looking after the transportation sector at one of the big four global consulting firms. He did not want to be named. “If Gateway Terminals reduces capacity and with the fourth container terminal slated to begin operations only in 2016-17, the situation is quite serious for India’s exporters and importers shipping their cargo through JN port,” he said.
  • In the past few years, port container traffic in India, the world’s second fastest growing major economy, has been expanding at an average 15% a year. At this rate, container traffic is estimated to reach 38.91 million standard containers by 2020, up from the existing capacity of 11.81 million standard containers, according to a 10-year plan unveiled by the shipping ministry in January 2011. Out of this, JN port is expected to handle 11 million standard containers by 2016 and 23 million standard containers by 2020, it said.

Source