Bangalore: Billionaire Gautam Adani may find it difficult to complete a plan to raise cargo-handling capacity to 200 million tonnes (mt) by 2020 from 75 mt after the home ministry denied a key security clearance that his port operating unit Mundra Port and Special Economic Zone Ltd (MPSEZ) needed to bid for a project at Vizhinjam in Kerala. The denial is the latest such case involving India’s biggest private port operator with facilities at Mundra and Dahej and more coming up at Hazira, Mormugao and Queensland in Australia. MPSEZ has applied for several projects tendered by Union government-controlled ports as well as those owned by state governments such as the one at Vizhinjam.

“Attaining the capacity target depends on how MPSEZ is able to resolve the security issue," said Vijay Sarma, a Mumbai-based independent port expert.

Mundra Port. Photo by Ashesh Shah.

Since November 2010, MPSEZ has been denied security clearance by the home ministry to bid for projects such as the fourth container terminal at Jawaharlal Nehru (JN) port, a project to mechanize iron ore loading facilities at Vizag port and now the Vizhinjam port project. The Adani group took the government to court after it was denied permission to bid for the fourth container terminal at JN port in 2011. The Mumbai high court, where the petition was heard, also clubbed the Vizag project with the case. The court ordered the Adani group to withdraw the petition with a direction to submit a representation to the shipping ministry to resolve the issue.

“We submitted our representation the very next day, but are yet to get a response from the ministry," a spokesman for the group said. Meanwhile, MPSEZ emerged as the highest bidder in December to build a cargo-handling project at union government-controlled Kandla port in Gujarat, where it was granted clearance, including that of the home ministry, before November 2010. The board of trustees of Kandla port is expected to take up the bid shortly for approval.

“Security clearance once given is given. There is no time limit for such clearance," a Kandla port official said on condition of anonymity. In December, the board of trustees of Chennai port rejected a price bid submitted by MPSEZ to build a big container terminal at the port because the quotation was below expectations. MPSEZ was granted security clearance for this project before November 2010. Chennai Port Trust has now decided to re-invite price bids from all the earlier short-listed and security-cleared bidders, including MPSEZ. A Chennai port official said the port will seek a clarification from the shipping ministry on whether the security clearance granted to MPSEZ for the project remained valid. Vizag port officials are in a dilemma because MPSEZ has applied for two projects there—one a berth to handle fertilizers and the other to mechanize iron ore loading facilities at an existing berth. While MPSEZ got clearances for the fertilizer berth before November 2010, it was denied security permission to bid for the other berth that followed later. The bidding process for both the berths are not yet complete.

“We have no idea how to deal with the issue and have asked the shipping ministry to take a view on what is to be done," said Ajeya Kallam, chairman of Vizag port.