BackPSA-JN Port ink biggest shipping FDI agreement
The project also involves the biggest single FDI yet in an Indian port project estimated about `3,160 crore
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Bangalore: The biggest single foreign direct investment (FDI) yet in an Indian port was formalized on Tuesday when Singapore’s PSA International Pte Ltd signed an agreement with Jawaharlal Nehru port to build a ₹ 7,915 crore container loading facility. Of this, the FDI component is ₹ 3,160 crore.
Bharat Mumbai Container Terminals Pvt. Ltd (BMCT), a wholly-owned subsidiary of PSA Bharat Investments Pte Ltd (which is a unit of PSA International Pte Ltd), signed the concession agreement with JN port on Tuesday, PSA said in a statement.
The agreement was signed in Delhi just days before the Congress party-led United Progressive Alliance (UPA) government demits office after a five-year term.
A spokesman for JN port, which handles more than half of India’s container volumes, confirmed the development.
“PSA will work along with Jawaharlal Nehru Port Trust to develop this very important terminal in India to cater to the increasing demand for container handling capacity, and facilitate maritime trade in India," said Tan Chong Meng, group chief executive officer at PSA International.
PSA International, the world’s biggest container port operator by volumes, is owned by Temasek Holdings, the sovereign wealth fund of Singapore. PSA handled 61.81 million containers in 2013, according to its website.
The new project, the fifth at India’s busiest container port, is a key to its capacity expansion plans.
The new terminal will be able to load 4.8 million containers a year, making it India’s biggest single container terminal by capacity and size, having a quay length of 2km with a water depth of 16.5 metres capable of handling large container ships.
The project, which will double the container loading capacity of the port, also involves the biggest single foreign direct investment yet in an Indian port project estimated about ₹ 3,160 crore.
In February, PSA emerged the highest bidder for the project by quoting the highest revenue share price bid of 35.79%. Ports contracts at union government-controlled ports are decided in favour of the bidder willing to share the most from its annual revenue with the port.
In the year ended 31 March, JN port loaded 4.16 million standard containers, operating at more than its designed capacity of 3.6 million standard containers a year. It has three container loading terminals while a fourth is under construction by Dubai’s DP World Ltd.
The port, one of the 13 owned by the union government, is expected to handle 11 million containers by 2016 and 23 million containers by 2020, according to a 10-year plan of the shipping ministry.
The latest project will be the first to utilize the new guideline for tariff-setting at ports owned by the union government that was announced in July 2013. The new rules grant flexibility to cargo handlers to raise rates every year based on market conditions subject to a cap of 15% if they comply with certain performance standards.
In the earlier rule, cargo handlers had to seek approval for rate increases from the regulator once in three years.
This is the second attempt at auctioning the project. A consortium of PSA and local firm ABG Ports Ltd was awarded the project after it quoted a record high revenue share then of 50.828% in a public tender in 2011.
But in October 2012, JN port withdrew the letter of award given to the consortium after the group failed to sign a concession agreement a year after it was awarded the project on 26 September 2011, resulting in a re-tender.
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