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Port policy puzzle: one Chinese firm gets security clearance, another doesn’t

Port policy puzzle: one Chinese firm gets security clearance, another doesn’t
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First Published: Sun, Jan 18 2009. 10 54 PM IST

Updated: Sun, Jan 18 2009. 10 54 PM IST
Bangalore: The Union government has given security clearance to a consortium that includes a Chinese port operator to bid for the coal and iron ore terminals at Paradip Port but has denied permission for another group that includes a Hong Kong company.
Chinese companies or groups with Chinese connections are banned from bidding for Indian port projects by the Union cabinet committee on security because of the political relationship between the two countries. Hong Kong, a former British colony, is now part of China.
The ministry of shipping, on advice from the defence and home ministries, has given the go-ahead for China’s state-owned Ningbo Port Group Ltd to bid for the Rs1,070 crore project at Paradip in Orissa, the first such approval for a Chinese firm since the ban came into effect in 1997.
Ningbo, which operates China’s second largest port by cargo handled, has teamed up with local firm Monnet Ispat Ltd and Hong Kong-based Great Harvest (Holdings) Ltd for the bid.
On the other hand, the ministry has denied security clearance for Hong Kong-based commodity trader Noble Group Ltd on security grounds, said an executive at one of the bidding firms on condition of anonymity.
The Noble Group-led consortium, which included Mumbai-listed Gammon Infrastructure Projects Ltd and state-owned MMTC Ltd, was ranked second in a list of 12 qualified bidders for the two terminals.
Shipping secretary A.P.V.N. Sarma said security-related issues for ports were dealt with by other government ministries and departments.
“We merely take security clearance of firms bidding for port projects from the ministry of home affairs, ministry of defence and the ministry of external affairs, and issue the letter. We have no particular say in this policy,” Sarma said on phone from Delhi on Friday. “I will not be able to clarify what the security clearance for the Paradip Port terminals means as a policy for future port projects.”
Another ministry official said on condition of anonymity that security clearance was always port specific, depending on the location of the port, but declined to elaborate further. Noble Group and the ETA-Saqr consortium could not be reached for comments.
Of 12 qualified bidders, Paradip Port Trust recommended the first eight to the shipping ministry for security clearance. The ministry rejected the Noble-led consortium and another group comprising Dubai-based Emirates Trading Agency Llc. and Ras Al Khaimah-based port operator Saqr Port Authority on national security considerations, the executive mentioned earlier said.
Noble Group is also part of a consortium that is developing the Rs1,700 crore Gopalpur Port, which is owned by the Orissa government. The project was awarded to a consortium comprising Orissa Stevedores Ltd (OSL), Sara International Ltd and Noble Group for development and operations.
Noble has a 33% stake in Gopalpur Ports Ltd, the port operating company.
Executives at the Noble-led consortium are surprised at the turn of events.
“Noble is headquartered in Hong Kong, but is not a Chinese company. It is owned by Americans and non-resident Indians,” said another executive working for the consortium. He, too, didn’t want to be named. The security clearance granted to one Chinese firm and the rejection of another based in Hong Kong has caught the industry by surprise.
“Does this mean that Chinese firms are allowed to participate in India’s port projects?” asked an executive with a Mumbai-based port logistics firm. “If they are allowed or not, then why was one given clearance and the other thrown out?”
The Paradip tender has created uncertainty among local firms looking to partner Chinese firms for India’s port tenders. “The Union government should make its policy clear and transparent on this issue. Can I go ahead and participate in port projects, teaming up with Chinese firms without wasting my time on whether the consortium will get security clearance or not?” the executive at the port logistics firm said.
The world’s top container cargo port operator, Hutchison Port Holdings, the port operating unit of the diversified Hutchison Whampoa Ltd owned by Hong Kong billionaire Li Ka-shing, has been denied permission in the past by the Union government to bid for projects at the Jawaharlal Nehru Port at Nhava Sheva, near Mumbai, because of its links with mainland China.
Taiwan shipping firm Evergreen Marine Corp. (Taiwan) Ltd has also been denied clearance for the same reason.
In another instance, a tender awarded to a consortium comprising two Chinese firms— Kaidi Electric Power Co. Ltd and China Harbour Engineering Co. Ltd—and Mumbai-based Zoom Developers Pvt. Ltd in 2005 by the Kerala government to develop a port at Vizhinjam was scrapped on issues related to national security. One of the Chinese firms in the group was also operating a port in Pakistan.
Graphics by Sandip Bhatnagar / Mint
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First Published: Sun, Jan 18 2009. 10 54 PM IST