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CCI says port policy anti-competitive

CCI says port policy anti-competitive
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First Published: Tue, Aug 12 2008. 09 19 AM IST

Port trouble: A file picture of the Jawaharlal Nehru Port in Mumbai. (Photo: Ashesh Shah/Mint)
Port trouble: A file picture of the Jawaharlal Nehru Port in Mumbai. (Photo: Ashesh Shah/Mint)
Updated: Tue, Aug 12 2008. 09 19 AM IST
Bangalore: The Competition Commission of India, or CCI, has said a government policy to shortlist only six bidders for cargo handling projects at 12 major state-owned ports does not benefit competition.
“Limiting the number of players is not a pro-competitive measure. It is not conducive to competition,” said an official at CCI—the country’s apex body that is mandated to rule on issues related to monopolies, competition, and mergers and acquisitions.
Port trouble: A file picture of the Jawaharlal Nehru Port in Mumbai. (Photo: Ashesh Shah/Mint)
The shortlisting policy has invited litigation by four entities that were exluded from bidding for a Rs1,300-crore container handling terminal at Ennore Port in Chennai and filed writ petitions in the Madras high court seeking a stay on the tendering process.
They have argued the policy was anti-competitive and arbitrary, and the port had erred in computing the so-called experience scores. Nine of the applicants with top experience scores from a list of 22 were eliminated from the bidding.
The four entities include global port operator PSA International Pte Ltd, Sical Infra Assets Ltd, a unit of Sical Logistics Ltd, ABG Infralogistics Ltd and the India Terminal consortium that comprises state-run Shipping Corp. of India Ltd, Terminal Investment Ltd, Samsung Group, Container Corp. of India Ltd, Central Warehousing Corp. and Hind Terminals Pvt. Ltd. Terminal Investment is an independent company promoted by Geneva-based Mediterranean Shipping Co. SA, or MSC, the world’s second biggest container shipping firm.
ABG has filed a writ independently though it is part of a PSA-led consortium.
These entities have also questioned the port’s decision to exclude them on the grounds that they were “non-serious” bidders. “If global port operators such as DP World and PSA are not serious players for a port business, then who are?” asked an executive with PSA who did not want to be named.
India’s Planning Commission has defended the controversial shortlisting policy. “On the one hand, the number of pre-qualified bidders should be adequate for ensuring real competition in bidding,” said the shortlisting policy recommended by the plan panel and approved by its committee on infrastructure. “On the other hand, a large number of short-listed bidders is viewed as a factor that dampens participation by serious bidders.”
“Limiting the number of players in a competitive bidding process acts as an entry barrier and obstructs competition,” said the CCI official who didn’t want to be named as he is not authorized to speak with the media. “All those potential bidders who qualify under the technical eligibility criteria should be allowed to bid. To state upfront that only six will be shortlisted is not a proper way of looking at it.”
The eligibility criteria set by the Planning Commission excludes experience in shipping, an activity that plays a key role in cargo-handling projects. “This is absurd. Port operators have long-term contracts with shipping firms that ship cargo and are their main customers,” said an official at Shipping Corp. “The tendering process lacks clarity and will unnecessarily delay the process to boost cargo-handling capacity at India’s 12 major ports,” said Shailesh Garg, general manager at the India unit of London-based maritime consultancy Drewry Maritime Services Pvt. Ltd. These ports have a 75% share of the cargo handled at all ports in India.
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First Published: Tue, Aug 12 2008. 09 19 AM IST