BackMangroves pose a threat to DP World’s new facility at JN Port
This is the second and more serious issue holding up the signing of an agreement that will set the project in motion
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Global port operator DP World Ltd is unable to start building a new container loading facility at JN Port because there are mangrove forests on the land marked for it, two people briefed on the matter said.
This is the second and more serious issue holding up the signing of an agreement that will set the project in motion.
The ₹ 800-crore project with a capacity to load 800,000 containers a year is key to JN Port’s expansion plans.
On 31 October, DP World was awarded the contract after it agreed to share 28.09% of its annual revenue with the Union government-controlled port in a public auction.
DP World, majority owned by the Dubai government, is the world’s fourth-biggest container port operator and already operates a facility at JN Port.
The winning bidder has to sign a concession agreement within 30 days of the issue of a so-called letter of award, according to the model documents framed by the government in 2009 for port tenders.
Of the 27ha that was to be handed over to DP World by JN Port, more than 15ha are covered by mangroves, where construction is not permitted, according to local laws. DP World has put the 28% revenue share price bid based on this.
“If the land is not there, the project will not work out," said a port official, one of the two people mentioned earlier.
“Mangroves have come up on land where containers handled by the terminal are to be stored. This is the basic land for the terminal. If this land is not there, where will you store the containers? How will you operate the terminal?" said a shipping ministry official, the second person mentioned earlier. Both the persons declined to be identified.
Without the full 27ha to be used as backup land for storing containers, DP World cannot construct the facility. To implement the project, the mangroves will have to be cut.
JN Port is in dialogue with the Maharashtra government, which looks after the forest issue, to solve the problem. “The port will have to give alternate land for growing new mangroves in return for permission to cut the existing ones," the ministry official said, admitting this isn’t easy either. “DP World has said that it can’t sign the concession agreement unless this issue is sorted out because it is the responsibility of JN Port."
On 19 February, an expert appraisal committee of the environment ministry extended the validity of the environment clearance for the project for a further period of five years.
Mint could not independently verify whether the committee had taken the presence of mangroves into consideration while granting the extension.
Naresh Dayal, chairman of the panel, could not be reached immediately for comment.
The project was granted environmental clearance from the ministry in July 2008. But, the award of contract was delayed due to lawsuits related to bidding, necessitating an extension.
DP World declined to comment. The spokespersons for the shipping ministry and JN Port admitted the mangroves have become a serious issue, but declined to discuss the matter further.
The first issue that had blocked the signing of the concession agreement has been resolved with the additional solicitor general of India, Kevic Setalvad, opining that it was not possible to substitute one legal entity with another for signing the concession agreement, said the shipping ministry official mentioned earlier.
JN Port had sought the additional solicitor general’s opinion after DP World requested it to allow Hindustan Ports Pvt. Ltd (HPPL), its proposed new Indian holding company, to sign the concession agreement.
In December, India’s foreign investment promotion board cleared DP World’s application to set up HPPL, which would also be the investor arm of the new container terminal project.
However, the model bidding documents do not permit substitution of one legal entity with another. The entity that has applied for the tender has to sign the agreement on winning it.
The Dubai firm has applied for the project as DP World Pvt. Ltd.
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