Plans to construct a fourth container terminal at India’s biggest seaport have once again hit a wall.
Earlier this week, officials at the Jawaharlal Nehru Port Authority officially threw out a winning bid from PSA International and domestic partner ABG Ports for a 30-year concession to build and operate the terminal.
Plans to build a fourth terminal have been beset by problems, from finding a suitable bid to dredging issues at the port complex which lies across a bay from India’s most populous city, Mumbai.
The problems have mostly revolved around what foreign terminal operators deem excessive royalties demanded by the Indian government. In the latest iteration, the bid proposed offering a nearly 51 percent share of revenue to the landlord port. But Singapore-based PSA decided against signing the bid by a prescribed deadline last month, leading to the cancellation of the bid.
So the port will go out to bid again on a project that would help it alleviate chronic congestion at its existing three terminals – two of which are privately operated.
It has been reported in local media that the high royalty levels weren’t viable in a period where demand for cargo from Europe and North America has been dampened, though the port handled a record volume of cargo in its latest fiscal year. Both the private terminals run at or past their design capacity.
PSA’s decision to drop out caps a tumultuous two years for the project. Two years ago, APM Terminals (which operates one of the private terminals at Nhava Sheva) successfully won a court case to allow it to bid on the fourth terminal, overturning a government stipulation that existing terminal operators at the port wouldn’t be eligible to bid on the new project.
Then, last summer, APMT abruptly pulled out of the bidding, saying the economics did not justify the investment. - Eric Johnson