JN port rejects PSA’s plea for more time to sign agreement2 min read . Updated: 06 Sep 2012, 10:33 PM IST
JN port rejects PSA’s plea for more time to sign agreement
Bangalore: Union government-controlled Jawaharlal Nehru (JN) port has rejected a request from Singapore’s PSA International Pte Ltd for more time to sign an agreement to build a 6,700 crore container loading facility at the port, setting the stage for a face-off between the two.
“We are not going to give them any more extension of time to sign the concession agreement for the project," a spokesman for JN port said. “Though PSA is a government-owned port company, we will take action as per clauses mentioned in the tender documents if they don’t sign the concession agreement by 10 September."
PSA International, the world’s second biggest container port operator, is fully-owned by Temasek Holdings Pte Ltd, the sovereign wealth fund of Singapore. A concession agreement sets out the terms and conditions of the contract and puts the project in motion.
The “action" proposed to be taken by JN port includes encashing the bank guarantee of 67 crore submitted by the consortium for the project. If they quit the project now, the team will also be barred for three years from participating in auctions at Union government-controlled ports, according to qualification rules for port bidders framed by the government in 2007.
In a communication sent to PSA on 30 August, JN port had asked the firm to sign the concession agreement for the project within 10 days, a deadline that ends 10 September.
PSA responded by asking for more time to sign the agreement besides requesting the government’s intervention to sort out the issue over payment of stamp duty, the port spokesman said.
PSA could not be reached for comment immediately. ABG declined to comment.
“They were supposed to sign the concession agreement within 30 days of getting the letter of award (26 September 2011) for the project. They have delayed this indefinitely. Now, they should sign the agreement by 10 September or face the consequences," the JN port spokesman said. The concession agreement was originally slated to be signed on 11 January this year, but was called off indefinitely over a stamp duty issue. PSA said it would not bear the cost of stamp duty for registering the document in Maharashtra where the port is located.
Significantly, the model concession agreement finalized by the government in 2007 clearly says that all statutory dues including stamp duty for registering the document will have to be paid by the private firm that builds the cargo loading facility.
The delay in implementing the project has raised its cost to 8,000 crore, JN port chairman L. Radhakrishnan, said on 18 May.
JN port handles around 57% of India’s container cargo passing through its ports. In the year to March 2012, the port loaded 4.32 million standard containers, operating at more than its designed capacity of 3.6 million standard containers a year. The port cannot handle more containers unless it expands capacity.
The port is expected to handle 11 million standard containers by 2016 and 23 million standard containers by 2020, according to a 10-year plan for ports unveiled by the shipping ministry in 2011.