The shipping ministry will now have to take a final call on permitting ABG Ports Ltd to withdraw from a consortium that was awarded India’s biggest private port contract at Jawaharlal Nehru port near Mumbai in 2011 after contradictory opinions from the law and finance ministries on the issue.

The law ministry said there was no provision for ABG Ports to withdraw from the consortium led by Singapore’s PSA International Pte Ltd at this stage of the project—after the letter of award was given to the successful bidder at the end of a public tender, but before it signed a so-called concession agreement with the port authority. A concession agreement is a document that sets out the terms and conditions of the contract and puts the project in motion.

photoThe public-private-partnership (PPP) cell in the department of economic affairs, ministry of finance, said the project-sponsoring ministry (shipping ministry in this case) would have to take a call on the proposal from ABG Ports on the basis of the provisions or clauses mentioned in the tender documents for the project.

The law ministry had based its opinion on the model tender documents approved by the Union government in 2008 for PPP projects in infrastructure sectors, including ports.

“In view of the contradictory opinions, the matter is now left for the shipping ministry to decide," a spokesman for the ministry said. “We are scrutinizing the tender documents for the container terminal project. If we find that the tender documents provide for the withdrawal of a consortium member at this stage of the project, we may go back to the law ministry for a fresh opinion," the spokesman added.

A decision on the withdrawal is vital for the progress of the project that has been held up since the PSA–ABG consortium was awarded the project in September 2011. The project will be the single biggest foreign direct investment (FDI) in an Indian port project.

After the letter of award was issued to the consortium, ABG had submitted a letter to JN port saying that it would consider withdrawing from the PSA team subject to consent from the port.

Since the withdrawal of a consortium member that had won the project, but before signing the concession agreement, was seen as a grey area in the model bid documents for public-private partnership (PPP) projects in the ports sector, JN port had referred the issue to the shipping ministry, which in turn referred the issue to the law ministry and the PPP Cell in the department of economic affairs for their opinion.

Singapore’s PSA International along with ABG Ports was awarded the project after it quoted the highest revenue share of 50.828% in a public tender for the 6,700 crore terminal that can load 4.8 million standard containers a year when fully operational.

A final decision on the withdrawal of ABG Ports from the PSA consortium will have a significant bearing on another terminal that JN port is planning to develop with private funds.

JN port plans to set up a smaller container terminal costing 750 crore with a capacity to load 800,000 standard containers. ABG along with IL&FS Maritime Infrastructure Co. Ltd is one of the four pre-qualified bidders for the smaller container terminal.

JN port had excluded ABG-IL&FS team from the bidding process for the smaller terminal after the PSA-ABG team won the bigger project, citing monopoly concerns. The ABG-IL&FS team challenged the port’s decision in the Mumbai high court, which allowed the consortium to bid.

But JN port has been repeatedly deferring dates asking for price bids from the four short-listed bidders for the smaller terminal till the issue of ABG’s withdrawal from the bigger terminal is resolved.

PSA and ABG declined to comment. A spokesman for JN port also declined to comment.

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