ABG wins India terminal project bidding
ABG Container Handling, a unit of Mumbai-listed ABG Infralogistics, has won the rights to develop and operate a new container loading facility at V O Chidambaranar port (formerly known as Tuticorin port) in Tamil Nadu, reported The Mint.
ABG quoted a revenue share of 55.19 percent to win the contract, a development that will pit ABG in direct competition with its Singapore partner PSA International that has been running a terminal at Chidambaranar port since 1999.
The price bid was approved by the board of Chidambaranar port on Tuesday, said Paul Antony, who holds additional charge as chairman of Chidambaranar port. Antony is the chairman of Cochin port.
PSA has been bidding for container terminal contracts in India in partnership with ABG. Last year, the team won a US$1.21 billion container terminal at Jawaharlal Nehru port that can load 4.8 million standard containers a year when fully operational.
ABG will invest $56.61 million to develop the facility at Chidambaranar port that can load 600,000 standard containers a year. A company spokesman said ABG would install 12 modern cranes to load and unload containers at the terminal.
Port contracts at Union government-controlled ports are decided on the basis of revenue share. The bidder willing to share the most from annual revenue with the government-run port gets the contract, typically stretching 30 years.
A consortium led by Sri Lanka's John Keells Holdings, the only other bidder to submit a price quotation from a shortlist of four, quoted a revenue share of 48 percent.
In 2009, ABG Infralogistics sold an 11.8 percent stake in the firm to PSA. The Singapore firm also paid $63.46 million for a 49 percent stake each in ABG Kandla Container Terminal and ABG Kolkata Container Terminal, the entities floated by ABG Infralogistics to run the two container-handling facilities at union government-owned Kandla and Kolkata ports respectively.
ABG bid for the Chidambaranar contract on its own.
PSA is battling tariff problems at its existing terminal in Chidambaranar port with the royalty payment to the port exceeding the income from handling a container.
PSA-Sical Terminals, the firm running the container terminal at Chidambaranar port, is 63 percent owned by PSA International, the world's second biggest container port operator. The remaining stake is held by local firm Sical Logistics.
In 14 years since starting operations, PSA made three attempts to raise rates for the services provided at the terminal, but each time the tariff regulator for the union government-controlled ports has slashed rates instead – by 15 percent in 2002, 54 percent in 2006 and 34 percent in 2008.
PSA did not implement these by securing stay orders from the Chennai high court. In effect, it is operating the 450,000 standard container capacity a year terminal at rates approved in 1999, when it started on a 30-year contract.
