Bangalore: Adani Ports and Special Economic Zone Ltd (APSEZ) is one of only two groups to have submitted initial bids to Kandla Port for developing a 5,992 crore container loading facility at Tuna-Tekra in Gujarat, once again triggering rivalry concerns.

Kandla Port, the country’s largest Union government-owned cargo handler, is about 60km away from India’s biggest private port at Mundra that’s run by APSEZ, and considers Mundra its biggest rival.

A consortium of Hyundai Engineering and Construction Co. Ltd and Concast Infratech Ltd is the only other bidder to apply for the tender issued by Kandla Port to build the terminal, which is to have a capacity to load 4.19 million standard containers a year.

Tuna-Tekra is in the Gulf of Kutch outside Kandla creek.

“Mundra port is our biggest competitor," said Kandla Port chairman P.D. Vaghela, who will demit office in December after five-years at the helm.

“It’s a huge project in terms of cost and capacity," Vaghela said in Bangalore on 16 November, indicating that the response to the tender was bound to be low.

Kandla loaded 93.6 million tonnes (mt) of cargo in the year to March, and Mundra port handled 82.13 mt.

“It would be no fault of APSEZ if the firm emerges the successful bidder for the project," said a Mumbai-based port consultant, requesting anonymity. “APSEZ has participated in an open competitive tender in which it was allowed to bid."

Vaghela confirmed the participation of the two groups but declined to discuss further. APSEZ declined to comment.

A few months ago, APSEZ emerged the successful bidder in a tender issued by Kandla Port to set up berthing and allied facilities off Tekra near Tuna outside Kandla creek to handle 14 mt of cargo a year with an investment of 1,060 crore.

Though some trustees on the board of Kandla Port opposed APSEZ’s bid citing rivalry concerns, the project was finally awarded to the company.

This scenario may crop up for the container terminal project also, said the port consultant mentioned earlier.

Containers are not handled at Kandla Port after a private terminal operating there shut down a few months ago following a dispute. At its peak in 2011-12, this facility handled 167,000 standard containers compared with a capacity of 600,000 standard containers.

Whereas Mundra, India’s second biggest container port after state-owned Jawaharlal Nehru port, loaded 1.74 million standard containers in the year to March.

Mundra port currently runs two container handling facilities—one run by Dubai’s DP World Ltd and the second by the Adani Group. These two terminals can together load up to 2.5 million standard containers a year.

Mundra opened a third container terminal a few months ago with a capacity to load 5 million standard containers when fully operational, taking the combined capacity of the three terminals to 7.5 million standard containers a year.

The low response to Kandla Port’s tender also indicates that the new tariff setting guidelines announced by the shipping ministry in July for new cargo handling projects such as the one in Kandla has not made any impact on private investors seeking to put money into Indian port projects, the consultant said.

This tender will utilize the new guidelines for market-linked tariff setting at ports owned by the Union government.

For the new terminal, Kandla Port secured approval from the port tariff regulator to set base rates on par with the rates fixed for a new container loading facility at JN port by making use of a provision in the new guidelines. The base rate so fixed will be indexed to inflation to the extent of 60%.

The new rules grant flexibility to cargo handlers to raise their base rates every year based on market conditions subject to a cap of 15% if they comply with certain performance standards. In the earlier rule, cargo handlers had to seek approval for rate increases from the tariff regulator which was either partially granted or rejected.

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