The Hindu Business Line : Kandla port board clears draft pact for box terminal

THE private operator selected by the Kandla Port Trust to operate a container terminal at the port will have monopoly over container handling only for a period of 10 years.

The Board of Trustees of Kandla Port Trust at a meeting held on January 29 approved the draft concession agreement for the project overcoming dissent from the labour trustees. "After 10 years, the Port Trust will be free to develop a new container terminal if the traffic justifies such a step," a Trustee told Business Line.

Moreover, if the successful bidder handles more than 5 lakh twenty-foot equivalent units (TEUs) per year for two consecutive years, the Port Trust has the option to develop a new container terminal either with its own funds or through private investments, he disclosed.

The Board of Trustees also vetoed a Shipping Ministry suggestion to allow the successful bidder to engage his own labour without taking over the workers employed with the Dock Labour Board (DLB). During pre-bid meetings, the three short-listed bidders - ABG Heavy Industries, Gammon India Ltd and Afcons - had sought the port's permission to be freed from the obligation of engaging the DLB workers.

The labour trustees opposed the proposal during the board meeting, arguing that this clause violated the DLB Act. "When the DLB Act is in force, you cannot allow a private operator to engage his own labour," a Union leader said. After discussions, the Port Trust Chairman said the private operator will have to engage the DLB workers as provided under the Act.

Though, the trustees representing labour and the industry chambers opposed the project on grounds of "privatisation and monopoly", the draft concession agreement was passed with seven voting in favour and five members opposing it.

Based on the draft concession agreement, the Port Trust will now invite price bids from the three pre-qualified bidders on the revenue share format wherein the bidder quoting the highest revenue share to the Government will be awarded the deal. The Rs 200-crore project involves handing over berths no 11 and 12 at the port to the successful bidder for handling containers for a period of 30 years.

While berth no 11 is ready for operations, berth no 12 will be handed over to the operator after 18 months of handing over berth no 11, official said. "Skanska has emerged the lowest bidder for constructing the berth no 12," he added. The two berths will have a total quay length of 545 metres with a draft of 13.5 metres.

The private operator will have to procure and install cranes at the berth and achieve a minimum guarantee throughput (MGT) of 1.75 lakh TEUs during the first year of operations, 1.8-2 lakh TEUs during the second year and scale it up to 4.5 lakh TEUs by the fifth year of operations.

When contacted, Mr M.L. Bellani, a labour trustee on the Board, said the workers were opposed to the privatisation proposal as the Government had the funds and the wherewithal to develop and operate the terminal on its own.

"The Port Trust has enough funds to develop the container terminal on its own. Secondly, this can hardly be called a pure BOT project since the Port Trust is handing over berths that are constructed with Government funds to the private operator for handling containers. When the port is already congested, it is not fair to hand over constructed berths to a private operator for handling cargo," Mr Bellani said.

All the three bidders (who are pure construction companies) have tied-up with experienced port operators to develop and operate the project.

Afcons has joined hands with the J M Baxi Group, while Gammon India has roped in Dubai-based International Container Services. ABG has informed the Port Trust that it will bring in a professional port operator if it succeeds in winning the deal.

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