Mumbai/Bangalore: A botched contract that has delayed efforts to deepen a channel at the Jawaharlal Nehru Port Trust, or JNPT, by at least four years now has the shipping ministry and JNPT pointing fingers at each other.
A blame game has started over the scrapping of the contract, for which Van Oord dredging and marine contracting company had emerged as the lowest bidder. The contract was cancelled in July because the bid of around Rs1,050 crore was 20% more than the estimate of Rs800 crore submitted by JNPT.
“We had duly approved the tender proposal by JNPT for (an) Rs800 crore dredging project. Later on, it was found that the calculation made by the port on dredging was wrong. By that time, the validity of lowest bidder had expired,” said Rakesh Srivastava, joint secretary, ports, shipping ministry. Validity refers to the project timeline that a bidder sets to avoid cost overruns.
Royal Haskoning BV, a Dutch consulting firm that prepared the estimates for dredging of a channel, has denied Srivastava’s allegations.
“The statement that the estimates were wrong is not correct,” said M.A. Merekar, deputy general manager, maritime, at the Indian unit of Royal Haskoning. “We are world-renowned in the maritime world and know the intricacies of dredging work. We can’t be that wrong.”
A port official backed Royal Haskoning. “By the time the price quotations were received from dredging firms, the global dredging market had firmed up. How can you blame the consultants for that?” the official said on condition of anonymity.
Instead, he blamed the government for taking two years to approve Royal Haskoning’s estimate.
The port’s decision to cancel the contract came 15 months after the Dutch dredging firm, one of the largest in the world, quoted the lowest of three bids in October 2007, almost three years after a tender was floated in 2004.
The board of JNPT had cleared the estimate and sent it to the shipping ministry for approval since the Union government has to clear any proposal to bid out a contract worth more than Rs500 crore.
“The dredging project was stalled at the shipping ministry level because it did not take the price quoted by Van Oord to the finance ministry for approval,” said the port official. The official spokesman of the port declined comment.
A new global tender is expected to be floated by July this year, but fresh bids will further delay the project, which is now slated to be finished by 2014, instead of the earlier estimate of 2010.
Losses due to lack of a deeper channel cost the port at Nhava Sheva near Mumbai around Rs600 crore every year, said Sudhir S. Rangnekar, former chief executive officer of Sical Logistics Ltd and a director of Shipping Corp. of India.
The port, which handles 55% of the country’s container traffic, managed 3.95 million standard containers in the year to 31 March, in excess of its designed capacity of 3.6 million standard containers. The port cannot handle more containers unless it builds additional terminals for larger ships, for which dredging and deepening of the port is vital.
Currently, many containers to and from India are shipped via nearby ports such as Colombo, Dubai, Singapore and Salalah in Oman, adding to costs.