Bangalore: DP World Pvt. Ltd emerged as the only bidder to submit a price quotation for developing a new container loading facility at Jawaharlal Nehru port near Mumbai as India’s busiest container port seeks to expand much-needed capacity. The new facility will cost Rs.750 crore to build.
DP World, majority owned by the Dubai government, quoted a revenue share of 27.09%, a JN port spokesperson said. DP World is the world’s fourth biggest container port operator by volume.
“We have submitted our bid for the project,” said Anil Singh, senior vice-president and managing director (subcontinent) at DP World. “DP World is committed to India and if the project is awarded to us, we will spare no efforts in bringing the project on stream in the shortest possible time.”
A spokesman for JN port said receiving a single bid will not be a problem in approving it.
“It doesn’t matter,” said the port spokesman. “We have gone through the whole tendering process. If the other short-listed bidders did not submit price bids, what can we do about it.”
But shipping industry executives pointed out that JN port had scrapped an earlier auction for the terminal in October 2009 as only two bidders, including DP World, were shortlisted for it, delaying the project by three years.
Port contracts at Union government-controlled ports are decided on the basis of revenue share. The bidder willing to share the most from its annual revenue with the government-owned port gets the contract, typically stretching 30 years, according to the port privatization policy of the Union government.
JN Port opened the price bid submitted by DP World on Thursday after the Mumbai high court ruled that a consortium led by ABG Ports—a pre-qualified bidder—could not bid for the facility.
The consortium of ABG Ports and IL&FS Maritime Infrastructure Co. Ltd was technically qualified to bid but was excluded by JN port citing a policy framed by the shipping ministry to check private monopoly at ports controlled by the Union government. The ABG Ports-IL&FS Maritime Infrastructure team had filed a petition in the Mumbai high court seeking permission to bid for the project.
JN port plans to develop, through private investments, a small container terminal with a berth length of 330m—half the normal length of 650-700m—with a capacity to handle 800,000 standard containers a year.
Other short-listed bidding groups for this terminal included Grup TCB S.L-Eredene Capital Plc; Sterlite Industries Ltd-Leighton Contractors (India) Pvt. Ltd.
The small terminal has a bright chance of getting implemented because it will be located adjacent a facility named Nhava Sheva International Container Terminal Pvt. Ltd, or NSICT, run by DP World at the port, say port experts.
The new terminal will have a contract period of 15 years ending in 2027.
DP World’s 30-year contract for the existing container terminal also ends in 2027. NSICT is the first privately run container loading facility to start operations at a Union government-controlled port after the government opened the ports sector to private funds in the late 1990s.
“New port capacity is critical to India’s economy, DP World’s Singh said. “JN Port is India’s largest trade gateway and new capacity is most essential here.”
JN port, located near Mumbai on India’s western coast, handles around 55.6% of India’s container cargo passing through its ports.
In the year to March, JN Port loaded 4.32 million standard containers, operating at more than its designed capacity of 3.6 million containers a year. It has three container terminals—one run by the government-owned port itself while the other two are run separately by DP World and a joint venture between APM Terminals Management BV and Container Corp. of India Ltd.
The port cannot handle more containers unless it expands capacity.
JN port is expected to handle 11 million standard containers by 2016 and 23 million by 2020, according to a 10-year plan unveiled by the shipping ministry in 2011.