Shipping Ministry seeks advice on letting APSEZ bid for govt tenders again

Ministry is concerned about wider repercussions of Supreme Court decision to revoke the firm's disqualification

Months after Adani Ports and Special Economic Zones (APSEZ) was given the green light to bid for government port projects by a Supreme Court order, the nodal ministry of ports, shipping, and waterways is seeking advice from law and finance ministry over re-allowing the country’s largest private port operator back into government contracts.

The shipping ministry is concerned about the wider repercussions of the Supreme Court’s decision to revoke the disqualification of APSEZ from participating in the government’s tendering process, Business Standard has learnt.

APSEZ is the country's largest commercial port operator, with eleven fully-owned ports and private terminals at state-owned ports. The firm claims to handle a fourth of the country’s cargo movement.

In September, the apex court had provided relief to APSEZ after it challenged its disqualification from a tender to develop a container terminal at Jawaharlal Nehru Port Trust (JNPT). The court said the company could participate in future tenders floated by public bodies.

Under the tender rules for central undertakings, firms involved in termination of contracts previously are debarred from participating in future tenders.

While the court did not get into the merits of the disqualification clause in the bidding process, it told APSEZ that it was free to challenge it in another petition.

The ministry is said to be assessing the implications of the Court’s decision on the public procurement system.

There are concerns within some branches of the Central government, re-allowing APSEZ questions the sanctity of the procurement process and limits the government’s ability to debar other parties blacklisted due to the same violation, this paper has learnt.

While the law ministry has been consulted to assess the legal validity of the move, the finance ministry’s inputs have been sought on the wider financial and regulatory implications that may be caused.

Questionnaires sent to the finance ministry, shipping ministry, and law ministry remained unanswered till the print time.

APSEZ, till September, was disqualified from multiple port tenders. It had also challenged some of these disqualifications in multiple state High Courts. In 2020, a special purpose vehicle (SPV) of the company created to handle a coal terminal at Visakhapatnam (Vizag) Port terminated its contract midway into its 30-year concession period, citing force majeure due to Covid-19. As a result, it was disqualified from future tenders.

APSEZ had argued before the apex court that it should be allowed to bid for fresh projects because the root cause of the disqualification - the termination of the coal operating terminal at Vizag Port — is currently under arbitration.

While the Supreme Court had considered the fact that the termination by an APSEZ subsidiary over the Vizag Port court terminal was under arbitration, sector experts said that arbitration should not be a sufficient condition to reverse blacklisting, as most cases of termination end up going to arbitration.