Bangalore: In a nimble about-turn, the Union government has reversed a January decision to grant security clearance to two consortia that were bidding for terminals at Paradip Port in Orissa.
One consortium has a Chinese firm as a member, while the other company is from the Untied Arab Emirates, or UAE. Both were bidding for coal and iron ore terminals at Paradip.
“We have denied security clearance to the Monnet Ispat Ltd-led consortium and the Lanco Infratech Ltd-led consortium because of their links with Chinese and UAE firms,” said a shipping ministry official on condition of anonymity. The move was to “maintain equal treatment to all players”.
Mired in controversy: A view of the Paradip Port.
Paradip Port officials confirmed the development.
The latest decision is an effort to keep in line with an earlier move to bar Chinese firms or groups with Chinese connections, as well as from the UAE, from bidding for Indian port projects, on account of national security concerns.
In January, the shipping ministry, on advice from the defence and home ministries, had given security clearance to both the consortia, but denied it to a consortium of Hong Kong-based Noble Group Ltd-Gammon Infrastructure Projects Ltd and state-owned MMTC Ltd because of its Chinese links. Hong Kong, a former British colony, is now a part of China.
The shipping ministry had also disallowed the consortium, consisting of Dubai-based Emirates Trading Agency Llc. and Ras Al Khaimah-based Saqr Port Authority, on national security grounds.
Mint reported this policy inconsistency on 19 January.
Monnet Ispat had bid for the Rs1,070-crore project with China’s state-owned Ningbo Port Group Ltd while Lanco Infratech had teamed up with Sharjah-based container port operator, Gulftainer Co. Ltd, for the planned coal and iron ore berths.
The ministry official said Paradip Port had failed to give the ministry a clear picture about the consortium members.
Monnet Ispat and Emirates Trading Agency could not be reached for comments.
The ban on Chinese firms could have an impact on another qualified bidder, London-based miner Rio Tinto Group. The group’s Indian unit, Rio Tinto India Pvt. Ltd, has already received security clearance to bid for the Paradip projects.
On 12 February, Aluminum Corp. of China (Chinalco) agreed to invest $19.5 billion (Rs94,965 crore) in Rio Tinto, a move that could almost double Chinalco’s stake in the global miner to 18% from 9.3%.
A letter has been sent to the home and defence ministries about the deal, claimed a person familiar with the development. He declined to be identified. Mint could not independently verify this claim nor the details of the letter and who wrote it.
While the ban on Chinese firms has been in force from 1997, when India opened its ports to foreign investors, the government’s latest decision to disallow firms from the UAE for the first time to bid for port projects has come as a surprise to many port developers.
“This will raise doubts on whether Dubai-government-owned port operator DP World Ltd would be allowed to bid for future port projects in India,” said an industry official who did not want to be named. DP World runs container handling facilities at Jawaharlal Nehru, Chennai, Cochin, Vizag and Mundra ports.
“The decision to exclude UAE firms from port projects has come from the defence and home ministries,” the shipping ministry official said. “It is not a general decision to exclude UAE firms. Security clearance is taken on a port-to-port basis.”