Visakhapatnam Port Authority paid Rs.155 crore last week to APSEZ, in accordance with an interim ruling of an arbitration panel, while Adani Ports has returned a coal handling facility to the port, a few years into a 30-year lease.
This is one of the few times that APSEZ has returned a cargo terminal to a port authority after it became unprofitable owing to changing business conditions. However, India’s largest private port operator is continuing the arbitration case and has filed a separate legal challenge in the Andhra Pradesh High Court to determine whether it or the port authority terminated the terminal “first.” This factor has a significant impact on APSEZ’s ability to participate in tenders for cargo-handling contracts granted by state-run ports.
“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 tender condition.
Using this clause, Visakhapatnam Port Authority disqualified APSEZ from participating in the tender for mechanisation of West Quay Berths 7 and 8 at the port. APSEZ challenged its exclusion before a single judge bench of the high court but lost the case. The firm has filed an appeal against the order before a division bench of the court.
