Ports ministry to recast Mormugao monetisation tender to attract more bids

The ministry of ports, shipping, and waterways is likely to restructure the Rs 842 crore tender for monetising the assets of Goa’s Mormugao Port, according to senior officials with knowledge of the proceedings.

The tender received only two bids in the preliminary technical round, one of which, by Adani Ports and Special Economic Zones (APSEZ), might be disqualified.

The project is part of the Centre’s national monetisation pipeline, which is expected to yield Rs 6 trillion by 2024-25. Ports are meant to be 2 per cent of the pipeline. Though the initial plan was to monetise 31 cargo berths valued at Rs 12,828 crore by the end of 2024-25, the shipping ministry, under its flagship Sagarmala project, has already added more than 50 new public private partnership (PPP) projects in the medium-term pipeline.

APSEZ, the largest port operator in the country, has faced disqualification from four tenders at three major ports. This was after a Special Purpose Vehicle (SPV) of APSEZ terminated a contract with Visakhapatnam Port in 2020 invoking the force majeure clause pertaining to events beyond the control the parties in the said contract. According to regulations, such terminations can disqualify a company for future tenders.

The second proposal for the Mormugao Port was from JSW Infrastructure. According to officials, the port authority recently sought direction from the ministry over the tender, because, if APSEZ were to be disqualified, there would be only one bidder left at the financial bidding stage.

“The other bidder will be aware of the likely disqualification and leverage its position as the effective sole bidder,” a senior official told Business Standard.

Therefore, the ministry is likely to restructure the tender to make the terms more attractive to bidders and invite fresh bids to increase competition, said the official. “The current terms are not viable enough to attract more bidders. We usually see at least five to six bidders for our PPP projects,” the official added.

More bidders would make the monetisation more remunerative for the Centre.

The state-owned Mormugao port had, in May 2022, floated a tender for the redevelopment of Berth Number 9 and three barge berths. Though a 2020 government estimate pegged the project’s value at Rs 700 crore, the tender was floated at a value of Rs 842 crore.

APSEZ moved the Supreme Court in June this year against its disqualification in a previous tender for a container berth by Navi Mumbai’s Jawaharlal Nehru Port Trust (JNPT). Though APSEZ’s initial plea was to stop the process of the JNPT tender, it has now sought a blanket stay on future disqualifications by port authorities across the country.

Its plea against the JNPT disqualification was rejected by the Bombay High Court in June 2022.

APSEZ has argued that it should be allowed to bid for fresh projects because the root cause of the disqualifications — the termination of the coal operating terminal at Vizag Port — is under arbitration. So far, in addition to JNPT, Kandla’s Deendayal Port Trust and Vizag Port have disqualified APSEZ from its projects.

Legal battles

December 2020: Vizag Port serves termination notice on APSEZ arm Adani Vizag Coal Terminal (AVCTPL) after the latter invoked force majeure

October 2021: AVCTPL sends contract termination notice to Vizag Port

APSEZ disqualified from Vizag Port tender for mechanisation of Western Quay 7 and 8 berths

December: APSEZ disqualified from Kandla Port (Deendayal Port Trust) tender for mechanised fertiliser and other clean cargo handling facilities without ascribing any reason

May 2022: APSEZ disqualified from Jawaharlal Nehru Port Trust’s (JNPT’s) container terminal tender

June: Bombay High Court dismisses APSEZ plea against JNPT disqualification

APSEZ moves Supreme Court, seeking stay on disqualification

July: APSEZ reportedly disqualified from JNPT tender for shallow water and coastal berths

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor