Port of Deendayal gives DP World an ultimatum to sign a concession agreement for the tuna terminal

The Deendayal Port Authority, the state-owned company that operates Kandla Port in Gujarat, has done so
Global port operator DP Word Ltd has been given an ultimatum to sign the concession contract for a mega container terminal at the port’s satellite facility in Tuna Tekra before the end of July, a senior port official said.

“We have asked them to sign the concession agreement for the project before July 31, otherwise we will see what can be done,” SK Mehta, chairman of the Deendayal Port Authority, said on Tuesday.

A public interest litigation (PIL) aimed at overturning the environmental permit granted by the Deendayal Port Authority for capacity expansion projects, including that at Tuna Tekra, has halted the signing of the concession agreement with DP World’s Indian branch in Dubai.

A concession agreement sets out the terms of a port contract and gets the project off the ground.

At the end of January, Hindustan Infralog Pvt Ltd clearly prevailed against India’s largest private port operator, Adani Ports and Special Economic Zone Ltd (APSEZ), and won the deal.

The global port operator, owned by the Dubai government, charged the highest license fee of 6,500 rupees for a 20ft equivalent unit or TEU, emerging as the winning bidder for the project – a bid that stunned the port industry.

APSEZ, the only other bidder who submitted a price bid, quoted the license fee as Rs 1,500 per TEU.

The construction of the planned container terminal with a capacity to handle 2.19 million TEUs per year will cost Rs. 4,243.64 million.

The Gujarat High Court, where the PIL was filed days after DP World was awarded the tender in January, has not granted a delay in signing the concession agreement for the project.

However, DP World has expressed its “reservations” about PIL in several rounds of talks with the Port Authority, officials with knowledge of the talks said, and asked not to be named.

“DP World said they were having trouble raising funds for the project with the pending court case,” an official said.

“This is the issue DP World is citing for the delay in signing the concession contract,” confirmed Mehta, Chair of the Deendayal Port Authority.

The company receiving a port contract must achieve financial completion of the project within six months of signing the concession agreement, according to the model concession agreement signed by the government.

“We are ready to sign the concession contract. We have had many rounds of talks with DP World. There were some minor errors in the concession contract; All of that has been corrected by her team and our team,” added Chairman Mehta.

The PIL hearing was lengthy because the filing company failed to appear in court for the hearing dates. Therefore, the matter was repeatedly postponed.

DP World is understood to have obtained a “commitment from the Port Authority” that the PIL will be settled soon to provide clarity before the concession agreement is signed. However, the Port Authority is not in favor of making such a commitment as it would expose them to unnecessary litigation later.

The Ministry of Environment, Forests and Climate Change and the Gujarat Coastal Zone Management Authority (GCZMA) granted the Port Authority Environmental and Coastal Regulatory Zone (CRZ) permits for seven integrated facilities in the port area in 2016 and three more facilities in 2020.

The petitioners alleged that the permits were obtained by concealing information about the presence of mangroves in the area. This was allegedly done to avoid restrictions and the Port Authority as well as the GCZMA failed to exercise due diligence and verify the presence of mangroves prior to issuing the green clearance.

The PIL indicated that the area falls into the CRZ-1A category according to the 2011 CRZ notification.

However, the CRZ approval was granted in the categories CRZ-1(B), CRZ-III and CRZ-IV.

The petitioners challenged the permits allegedly issued in the wrong categories and sought to revoke the permits issued by the Department of Environment, Forestry and Climate Change.

PIL also asked the Court for instructions to the Department of Environment, Forests and Climate Change and GCZMA to reconsider permits under the 2011 CRZ Notice and other applicable regulations.

The Deendayal Port Authority operates the country’s largest state port by volume and the country’s second largest at Kandla in Gujarat. Tuna-Tekra is a satellite facility located about 15 km away.

The Tuna-Tekra container terminal is part of the National Infrastructure Pipeline
Government. It’s also part of a plan by the Port Authority to double her cargo to 267 tonnes in seven years, or by 2030.

The planned box terminal will be designed and equipped to handle ships with a capacity of more than 18,000 TEU.

Related Articles

Back to top button