Mumbai HC throws out PIL against PSA terminal in JN Port
Dismissal of PIL to remove uncertainty around construction of new facility by Singapore's PSA International at Jawaharlal Nehru Port
Bangalore: The Bombay high court on Tuesday dismissed a public interest litigation (PIL) seeking to prohibit Singapore’s PSA International Pte Ltd from constructing a new container terminal with an investment of ₹ 7,915 crore at Union government-owned Jawaharlal Nehru Port near Mumbai.
The dismissal of the petition will remove the uncertainty and potential delays surrounding the construction of the new facility, billed as the biggest single foreign direct investment (FDI) in an Indian port project.
“The PIL has been dismissed," said N.N. Kumar, chairman of JN Port, India’s busiest container gateway.
However, a Mumbai-based lawyer familiar with the case said that the petitioner may take the case to the Supreme Court. The petitioner, Mandar Narhari Parab, could not be reached immediately for comment.
Through the PIL, the petitioner, a journalist, had sought a court order prohibiting PSA from developing the new facility, as the firm’s failure to fulfil its obligations on winning the same project in an earlier round of auction in 2010 raised the project cost by ₹ 1,215 crore. The delay in building the terminal resulted in a loss to JN Port, thereby compromising public interest, according to the PIL.
The petitioner contended that PSA should have been black-listed by JN Port and barred from participating in the re-tender because of its failure to abide by the tender conditions in the earlier round.
Though, JN Port subsequently encashed the bid security of ₹ 67 crore submitted by PSA in the earlier auction for the ₹ 6,700 crore project that was designed to load 4.8 million standard containers a year, the petitioner said that this loss for PSA was “minuscule" as compared to the “loss caused to the country in monetary terms as well as opportunity costs".
In its price bid submitted in 2013, PSA has offered a revenue share of 35.79% compared with 50.82% in 2010. “By forfeiting a measly amount of ₹ 67 crore, PSA made a huge killing on the re-tendered project," the petitioner submitted.
Hence, awarding the project again to PSA would be “counter-productive and against national interest", the petitioner contended.
“Awarding the contract to PSA would amount to setting a bad precedent whereby bidders would be encouraged to take a chance in respect of submitting bids and walk out with measly forfeiture of bank guarantee and put the exchequer to huge loss as has happened in the present case," Parab contended in his petition, a copy of which was reviewed by Mint.
The petitioner also sought the court’s directive to black-list PSA from submitting a bid on any tender issued by the government and also to initiate legal proceedings against PSA to recover losses incurred by JN Port.
When contacted, PSA said it had no comment to offer.
In May, PSA International signed a so-called concession agreement with JN Port to build a ₹ 7,915 crore container loading facility at the port that handles more than half of India’s container cargo shipped through its ports. The project involves FDI of about ₹ 3,100 crore.
A concession agreement sets out the terms and conditions of a port contract and puts the project in motion.
PSA emerged the highest bidder for the project by quoting the highest revenue share price bid of 35.79%.
Port contracts at Union government-controlled ports are decided on the basis of revenue share—the bidder willing to share the most from its annual revenue with the government-owned port gets the contract, typically stretching over 30 years, according to the port privatization policy of the government.
PSA International, the world’s biggest container port operator by volumes, is fully-owned by Temasek Holdings Pte Ltd, the sovereign wealth fund of Singapore. PSA handled 61.81 million standard containers in calendar year 2013, according to its website.
In October 2012, JN Port withdrew the letter of award given to a consortium led by PSA after the group failed to sign a concession agreement a year after it was awarded the project in September 2011 in a public auction.
The consortium of PSA and local firm ABG Ports Ltd was awarded the project after it quoted a then record high revenue share of 50.828% in a public tender.
The winning bidder has to sign the concession agreement within 30 days of accepting the letter of award for the project, according to tender conditions.
The new project, the fifth at JN Port, is key to the port’s capacity expansion plans, as it will double the container loading capacity of the port and help it position as a hub port on India’s western coast.
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