Sign terminal deal soon or scrap it, JNPT told
The Union shipping ministry has instructed the government-controlled JNPT to sign a long-pending deal with PSA International or terminate the contract and seek compensation from PSA for the loss to the port, said senior ministry officials who didn't wish to be named.
The ministry has also told JNPT that it will not interfere in the matter any more, and the port has to take a final decision on the proposed investments by PSA, reported The Economic Times.
The US$1.2 billion deal is to construct the largest container terminal at the port.
"We have made it clear to JNPT that they have to sign the deal or seek compensation from PSA-ABG for the delay.
The ministry will not interfere any further in the matter and the ball is now in JNPT's court.
“This project has been delayed for more than a year now," said a senior official at the ministry of shipping.
The JNPT board had already sent an ultimatum to PSA on Wednesday to sign the deal and is awaiting a response. Its board will meet on September 17 to finalise the deal.
Last week, a PSA delegation that had met the Union shipping secretary was told that no further delay is acceptable.
"They met us this week, but we have told them that the dilly-dallying cannot continue forever and that they need to sign the deal or move out," the official added.
According to the terms and conditions of the model concession agreement, the port will now have the right to decide on the compensation for the damages from a successful bidder, if they fail to sign the concession agreement, and that could be appropriated from the bid security amount.
PSA had given a bid security of $12 million at the time of bidding and the port is wondering whether to encash the amount or charge more for the loss.
"In our show-cause notice sent to PSA on Wednesday, we have told them that we will revoke bid security amount, if they do not sign the deal.
“We have given them time before the board meeting to inform us about their commitment to sign the deal.
They have informed us of certain terms and conditions that they have, but they must express their commitment to the project first," a senior official at JNPT said.
In September last year, the country's largest container port awarded the contract for construction of its fourth container terminal to a consortium led by PSA and ABG.
