DP World spat with Adanis over Mundra intensifies

DP World spat with Adanis over Mundra intensifies

In an escalating dispute, Adani Group, promoter of Mundra Port and Special Economic Zone Ltd in Gujarat, has alleged that DP World is trying to create a monopoly as it seeks to justify the Adanis’ decision to operate a new container terminal there despite a non-compete pact with the container port ­operator. “They (DP World) want to have monopoly over container handling terminals in Gujarat," insisted Rajeeva Ranjan Sinha, director, corporate strategy and business development at Adani Group.

P&O Ports (now acquired by DP World) had paid $292 million (about Rs1,356 crore then) to the Adanis in 2003 for buying the rights to operate and maintain the first container terminal at Mundra as well as non-compete clauses.

An agreement signed on 8 November 2002 prohibits the Adanis from operating a competing container terminal for 10 years anywhere in Gujarat outside the Mundra port without prior, written permission from DP World.

Another business agreement signed in January 2003 prohibits the Adanis from operating a new container terminal facility at Mundra port until container volumes reach 1.5 million twenty-foot equivalent units (TEUs) a year at the first terminal.

As per this agreement, the Adanis were also required to hand over a 618m quay wall and 19.633ha of unpaved back-up area for container storage to DP World for constructing a new terminal after the container volumes at the first terminal reached 700,000 TEUs or on completing eight years of operations, whichever was ­earlier.

DP World had to give a 30- month notice to the Adanis for taking over the second-stage assets for a consideration of $70 million, as decided by both under the November 2002 agreement.

The Dubai government- owned DP World has already taken the Adanis to court for not transferring assets of a second- stage container terminal, and for operating a competiting container handling facility from August this year, thereby flouting the non-compete obligations.

The Adanis have argued they were compelled to operate a new container terminal at Mundra after the facility, which was constructed at a cost of Rs633 crore (50% more than the $70 million agreed between the two parties in 2003), could not be left idling.

Ganesh Raj, DP World’s senior vice-president and managing director sub-continent, said: “DP World will take the litigation to the highest courts of the ­country."