PSA bows out of Mumbai port project
The port operator told Business Times Singapore it will bow out of a much-delayed US$1.2 billion container terminal project in Mumbai after the Jawaharlal Nehru Port Trust (JNPT) last month tore up the contract it awarded to PSA and its local consortium partner, ABG Ports.
"We regret the decision by the Jawaharlal Nehru Port Trust Board to withdraw the letter of award earlier issued to the PSA-led consortium for the development of the JNPT4 container terminal project," said a PSA corporate spokesperson.
Last September, the PSA-led consortium beat out five other parties to design, build, finance and operate the JNPT4, a container terminal that was to be India's largest foreign investment into a port.
JNPT4 would have been PSA International's largest container terminal in India with a designed capacity of 4.5 million TEUs.
However, progress on JNPT4 began to lose steam in January 2012 when PSA – the 74 per cent majority partner in the consortium – did not sign the concession agreement.
The first hold-up was an unspecified stamp duty sum that was to be paid to the Maharashtra local government in order to register the concession documents. The stamp duty is understood to range between $1.1 million and $62 million.
JNPT4 ran into another spot of difficulties in April 2012 when PSA's local partner ABG told JNPT it wanted to withdraw from the consortium and the project.
Four months later, the port trust told the consortium ABG could not pull out and slapped a final deadline of September10 for the consortium to sign the concession agreement.
On September17, JNPT told the Indian media it was terminating the contract with the PSA-ABG team and had cashed the consortium's $12 million bid guarantee.
The consortium was also told it could revive the contract if they paid a further $65.2 million in performance guarantees.
"PSA worked expeditiously to prepare for the signing of the concession," said the PSA spokesperson about what had transpired over JNPT4. "However, there were unexpected developments and differences that arose on key issues along the way that were beyond our control.
"Notwithstanding PSA's best efforts to engage and discuss with all the relevant stakeholders, these differences were not satisfactorily resolved."
JNPT chairman L Radhakrishnan told a trade publication in October that it would be seeking damages from PSA.
"The contract was awarded over a year ago, and we gave the PSA-ABG consortium adequate time to get going. The JNPT board has noted that the consortium wasted precious time and delayed the project with frivolous issues. We will seek damages from the consortium," said Radhakrishnan.
BT understands no legal action has yet been started against PSA International in India over JNPT4.
PSA remains committed to India, it said, even as media outlets have reported that the government may slap a three-year ban on the terminal operator.
PSA has four other terminal interests in Chennai, Kandla, Kolkata and Tuticorin. Kandla and Kolkata are jointly run by PSA and ABG.
"PSA has always upheld the belief that there is great market potential in India and we will continue to develop our existing portfolio of port projects in India and look for other opportunities to invest in the country," said the company spokesperson.
JNPT has said it will have to hold a re-tender for the JNPT4 concession.
