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Fresh row over bidding process for cargo-handling contract

Fresh row over bidding process for cargo-handling contract
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First Published: Mon, Mar 09 2009. 11 03 PM IST
Updated: Mon, Mar 09 2009. 11 03 PM IST
Bangalore: Almost a year after price quotations were opened, a 10-year contract to operate and maintain two bulk cargo-handling berths at Haldia dockyard of Kolkata port is yet to be awarded.
In April, a consortium led by Mumbai-based ABG Infralogistics Ltd emerged as the lowest bidder for the project beating two others—Ripley and Co. Ltd and Sical Logistics Ltd—in competitive bidding. Ripley had bid for the project along with TM International Logistics Ltd, the joint venture logistics firm floated by Tata Steel Ltd and Germany’s Martrade Holdings GmbH.
A small group of port officers has now raised objections against awarding the contract, arguing that the port would not benefit from the deal if it is given to ABG, well after the port received price quotations, Mint has learnt.
Ripley, a contender for the projects, alleges irregularities in the tendering process. “It looks like the eligibility and experience criteria for bidding were set by the port to suit the interests of ABG,” P.K. Jaiswal, a director at Ripley, said over phone from Kolkata.
However, a top port official said: “The port has followed a fair and transparent bidding process, leading to the mechanization of the port.” He declined being identified because of the delicate nature of the issue.
An ABG spokesperson declined to comment on the issue saying the company has submitted its bid and it is for the port authorities to take a decision.
A spokesperson for Kolkata port could not be reached for comments despite repeated phone calls.
In the public auction, ABG quoted an average rate of Rs75 per tonne for handling coal and iron ore, the lowest in the auction. According to the deal, the Union government-owned Kolkata port will collect user charges fixed with the approval of the port tariff regulator—likely around Rs150 per tonne—and share Rs75 per tonne out of this with ABG. This effectively translates into a revenue share of 50% to the port.
The way the model works is that the private firm, or contractor, invests in cranes, and operates and maintains the facility whereas the tariff is collected by the port, a portion of which is shared with the contractor. Thus, the firm asking for the lowest per tonne rate from the port for handling cargo is awarded the deal.
Kolkata port is not required to make any other investment in these berths. The company awarded the contract would have to invest about Rs200 crore to buy and install cargo-handling equipment to double the cargo capacity of the berths.
Besides coming second behind ABG in the tender, Ripley, owned by Swapan Sadhan Bose, a Rajya Sabha member of Parliament belonging to the All India Trinamool Congress party, will also lose its existing business at these berths. The firm currently undertakes stevedoring at these two terminals, charging some Rs210 per tonne from customers, which is 64% higher than ABG’s quote. The lion’s share of the stevedoring work at the two berths is done by Ripley, though another stevedoring firm, AM Enterprises owned by Amit Mukherjee, also operates there.
Stevedores are engaged by shipping lines and users to provide cargo handling services at ports but do not have to come through a competitive bidding process and are not investing in highly capital intensive cranes that helps unload and load cargo.
Kolkata port has set stiff conditions for the new contractor, including collecting penalties for inefficiency and productivity, something not applicable to stevedoring firms such as Ripley.
“ABG does not have any experience in cargo handling apart from operating mobile cranes which was one of the main criteria for qualification,” Jaiswal alleged. “Experience in follow-up system is also vital to clear the cargo from the stock yard by road or rail. ABG does not have this experience.”
However, ABG operates similar facilities at Union government-owned ports at New Mangalore, Paradip and Vizag.
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First Published: Mon, Mar 09 2009. 11 03 PM IST