APM Terminals seeks legal backing for JN Port contract

APM Terminals seeks legal backing for JN Port contract
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First Published: Tue, Dec 22 2009. 10 33 PM IST

Expanding capacity: The government has put up two projects at Jawaharlal Nehru Port for auction. Ashesh Shah / Mint
Expanding capacity: The government has put up two projects at Jawaharlal Nehru Port for auction. Ashesh Shah / Mint
Updated: Tue, Dec 22 2009. 10 33 PM IST
Bangalore: Global port operator APM Terminals Management BV is seeking legal backing to be allowed to bid for a new container terminal at Central government-owned Jawaharlal Nehru Port (JN Port), India’s busiest container port.
Expanding capacity: The government has put up two projects at Jawaharlal Nehru Port for auction. Ashesh Shah / Mint
The port operating unit of Danish shipping and oil conglomerate AP Moller-Maersk Group A/S has filed a writ petition in the Bombay high court against the decision of the port to exclude it from the auction for developing and operating a new container handling facility, the port’s fourth.
JN Port has cited a clause in the licence agreement for a container terminal, operated by a consortium comprising APM Terminals and state-owned Container Corp. of India Ltd (Concor) since 2006, to exclude it from the auction for the new terminal. The licence condition, signed by the APM Terminals-Concor joint venture, states that it will not be allowed to bid for new container terminals planned by JN Port with private investments.
However, in its petition, APM Terminals has argued that this condition was against the spirit of a Central government policy that prohibits a firm that had won the last cargo-handling contract at a state-owned port from participating in the bidding process for the immediate next contract to prevent monopoly and promote competition within a port. However, it will be allowed to bid for subsequent projects.
The Union government-owned port has put up for auction two new projects for expanding container handling facilities at the port.
One is a small container terminal with a capacity to handle 600,000 standard containers a year. The second is a larger terminal with a capacity to handle four million standard containers a year.
JN Port excluded APM Terminals from the auction for the small terminal, which follows the one that the firm is currently operating. It contends that APM Terminals cannot participate in the auction for the big terminal also because of the licence condition it has signed with the port for the terminal it is operating with Concor.
APM Terminals is asking the court to stay the auction process for the big terminal till the petition is decided. Firms have time till 31 December to submit initial bids or a so-called request for qualification documents to be allowed to participate in the new contract.
The port, located near Mumbai, handles around 50% of the country’s container cargo of around 7.85 million standard containers a year. In the year ended March, the port handled 3.95 million standard containers, operating at more than its designed capacity of 3.6 million standard containers.
JN Port runs one of its three container handling facilities. The other two are run separately by DP World Pvt. Ltd and the APM Terminals-Concor venture. The port cannot handle more containers unless it expands capacity.
Over the past few years, port container traffic in India has been growing at an average of 15% a year. At this rate, the container traffic is estimated to reach 21 million standard containers by 2014, up from 9.1 million in 2008, says the Union shipping ministry.
“The matter is still in the court. We cannot make any comment at this stage,” said an executive at the Indian unit of APM Terminals. He did not want to be named because he is not authorized to speak to the media.
A spokesman for JN Port declined to comment.
p.manoj@livemint.com
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First Published: Tue, Dec 22 2009. 10 33 PM IST