The global port operator, owned by the Dubai government, has been asked to sign the concession agreement for the project before 31 July, says Deendayal Port Authority Chairman S K Mehta.
“We have asked them to sign the concession agreement for the project before 31 July or else we will see what can be done,” Deendayal Port Authority Chairman S K Mehta said.
A public interest litigation (PIL) seeking to annul the environment clearance granted to Deendayal Port Authority for building capacity expansion projects, including the one at Tuna Tekra, has halted the signing of the concession agreement with the Indian unit of Dubai’s DP World.
A concession agreement sets out the terms and conditions of a port contract and puts the project in motion.
Hindustan Infralog Pvt Ltd trounced India’s biggest private port operator, Adani Ports and Special Economic Zone Ltd (APSEZ), by a wide margin to win the deal in late January.
The global port operator, owned by the Dubai government, placed the highest royalty of Rs6,500 for a twenty-foot equivalent unit or TEU to emerge the successful bidder for the project in a bid that stunned the ports industry.
APSEZ, the only other bidder to submit a price bid, quoted Rs1,500 per TEU as royalty.
The planned container terminal with a capacity to handle 2.19 million TEUs a year will cost Rs4,243.64 crore to build from scratch. The Gujarat High Court, where the PIL was filed a few days after the tender was awarded to DP World in January, has not granted a stay on signing the concession agreement for the project.
However, during multiple rounds of discussions with the port authority, DP World has conveyed its “reservations” emanating from the PIL, officials briefed on the discussions said, asking not to be named.
“DP World said that they were facing issues in raising funds for the project in view of the pending court case,” an official said.
“That is the problem DP World is citing for the delay in signing the concession agreement,” Deendayal Port Authority Chairman Mehta confirmed.
The entity winning a port contract will have to achieve financial closure for the project within six months of signing the concession agreement, according to the model concession agreement finalised by the government.
“We are ready with the concession agreement to be signed. We have held many rounds of discussions with DP World. There were some minor mistakes in the concession agreement; all that have been corrected by their team and our team,” Chairman Mehta added.
The hearing on the PIL has been dragging as the entity that had filed it has not appeared before the court on the dates for hearing. Hence, the matter was getting postponed repeatedly.
DP World is understood to have sought an “undertaking from the port authority” that the PIL would be settled soon to get clarity ahead of signing the concession agreement. The port authority, though, is not in favour of giving such an undertaking as that would expose it to needless litigation later.
The Ministry of Environment, Forest and Climate Change as well as the Gujarat Coastal Zone Management Authority (GCZMA) granted environmental and coastal regulation zone (CRZ) clearances in 2016 to the port authority for seven integrated facilities within port area, and for three other facilities in 2020.
The petitioners alleged that the clearances were sought by concealing information on 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 by verifying the presence of mangroves ahead of granting green clearance.
The PIL said that the area falls within the CRZ-1A category per CRZ notification of 2011. But the CRZ nod was granted under CRZ-1(B), CRZ-III and CRZ-IV categories.
Challenging the clearances granted under allegedly wrong categories, the petitioners have sought to annual the approvals given by the Ministry of Environment, Forest, and Climate Change.
The PIL also sought directions from the court to the Ministry of Environment, Forest, and Climate Change and the GCZMA to consider the clearances afresh per the CRZ notification of 2011 and other applicable rules.
Deendayal Port Authority runs the country’s biggest state-owned port by volumes handled and the nation’s second largest at Kandla in Gujarat. Tuna-Tekra is a satellite facility located some 15 kms away.
The Tuna-Tekra container terminal forms a part of the National Infrastructure Pipeline of the government. It also forms part of a plan by the port authority to double its cargo to 267 mt in seven years or by 2030.
The planned box terminal will be designed and equipped to handle ships that can carry more than 18,000 TEUs.
