India denies security clearance to China’s crane maker ZPMC
Security clearance denied to supply gear to a container-loading facility being built by Gammon Infrastructure Projects at Mumbai port
Bangalore: India has denied security clearance to China’s state-owned crane maker Shanghai Zhenhua Heavy Industries Co. Ltd (ZPMC) to supply gear to a container-loading facility being built by Gammon Infrastructure Projects Ltd at Mumbai port.
This is the first time a Chinese port equipment maker has been denied such clearance, although Chinese port operators and related entities are already barred from bidding in Indian port projects.
ZPMC has previously supplied cranes to cargo-loading terminals at India’s ports, including Jawaharlal Nehru port, a few kilometres from Mumbai. It is not clear whether the denial to ZPMC is limited only to the Mumbai port project or will apply to other ports also.
“In connection with your application to procure container handling equipment from ZPMC, a Chinese firm, it is informed that the competent authority has denied security clearance to ZPMC," M.V. Patwardhan, chief engineer, Mumbai port, wrote in a 22 August communication to Gammon Infrastructure, a unit of Mumbai-listed construction firm Gammon India Ltd. Mint has reviewed a copy of the communication.
The denial comes a year after Gammon filed an application with Mumbai port seeking clearance to buy six quay cranes and 20 rubber tyred gantry cranes worth ₹ 500 crore from ZPMC for the upcoming terminal.
“We have to find a new vendor for buying the cranes and the delay in deciding on the security clearance to ZPMC has raised the cost of procuring the cranes to ₹ 600 crore," a spokesman for Gammon Infrastructure said.
ZPMC could not be reached immediately for comments.
ZPMC, the world’s biggest heavy duty equipment manufacturer, is a state-holding company listed on the Shanghai stock exchange. China Communications Construction Co. Ltd is the main shareholder of ZPMC, which has a 75% global market share in container cranes and ore/coal bulk material-handling machinery.
Since 1997, Chinese companies or groups with Chinese connections have been barred from bidding for building Indian port projects by the Union cabinet committee on security because of the sour political relationship between the two countries.
These entities include Hutchison Port Holdings, the world’s second biggest container port operator and owned by Hong Kong billionaire Li Ka-shing, Kaidi Electric Power Co. Ltd, China Harbour Engineering Co. Ltd and Taiwanese shipping firm Evergreen Marine Corp. (Taiwan) Ltd.
The denial to ZPMC will add to the delay in opening the new terminal at Mumbai port.
In early August, Gammon Infrastructure had sought a compensation of ₹ 350 crore from Mumbai port for failure to fulfil its obligations under the contract, which has delayed the opening of the container terminal the firm is building there, the Gammon spokesman said.
Gammon has completed constructing the berth for the ₹ 1,228-crore project, but is unable to start operations because the port is yet to complete the dredging work and hand over the back-up area required to store containers.
“Mumbai port is yet to finalize a dredging contractor to complete the channel deepening work after terminating the contract with the earlier contractor for non-performance," the Gammon spokesman said.
The first phase of the new facility with a capacity to load 1.2 million standard containers a year was expected to start operations in 2010. The facility is now expected to start in April 2015, he said.
The delay has escalated the cost of constructing the terminal to about 1,500 crore.
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