Kandla Terminal Tender Raises Hackles

The tender floated by the Kandla Port Trust (KPT) for the construction of a container terminal has come in for strong criticism by a number of prospective bidders, sources said.

At a pre-bid conference in Kandla held earlier this month, a number of companies voiced reservations regarding various clauses, according to sources.

These include the absence of a threshold throughput, non-remission of pilotage charges, compulsive use of port labour for certain functions and KPT's insistence that the berth be used as a multi-purpose one when the licencee's ships are not docked there. KPT floated a global tender for the construction of a 600 metre container terminal consisting of two berths in August. Over 20 companies including global majors like Maersk, Marubeni, Sea-Land, Evergreen and P&0 Ports Australia purchased the bid documents.

 

Indian companies in the fray include, a Larsen & Toubro led consortium, Mahindra & Mahindra, Container Corporation of India, Central Warehousing Corporation and ABG Heavy Industries.

At a pre-bid conference in Kandla on November 6 prospective bidders were agitated that the tender had not stipulated any minimum throughput (cargo handling). This places the onus of determining the throughput to be handled at the berth entirely at the winning bidder's (licencees) door.

Several companies at the pre-bid conference protested against this saying the default throughput would now be calculated on the basis of the figure they mention in their bids. This in essence meant that if bidders do not handle the cargo submitted by them in their bids for two consecutive years, the port could disqualify them from managing the container terminal.

KPT has also contended that when the licencee is not using the berth, the port trust can bring in its own ships including bulk carriers. This too was protested against by a number of companies. However, it is reliably learnt that not all those who attended the conference were against this clause.

KPT's other condition is that port labour should be used for operations on the ship as well as on the ground. The licencee can use his labour only for handling the container terminal equipment. This has caused much heartburn as the licencee in effect will not have any control over labour.

Prospective bidders say this will come in the way of handling the required throughput especially since the tender makes it clear that a minimum norm of 20 moves per crane per hour has to be adhered to.Currently, this is not being done in any Indian port including JNP.

Another condition that came in for flak related to draft (depth of the river). KPT has guaranteed to maintain a minimum draft of 9.14 metres. However, in case the KPT fails to do so, it has made it clear that the licencee cannot cite that as a condition for not adhering to the throughput submitted in the bid. Sources say this is very difficult to adhere to as Kandla being a riverine port is subject to frequent silting and therefore maintenance dredging is continuously required.

The port trust has also agreed to provide pilotage and towage services for bringing ships into the channel. However, it has made it clear that if there is any disruption in these services, it will not settle for a lower throughput. A number of objections were raised to this as KPT is plagued by a shortage of pilots. Not many pilots are prepared to stay at Kandla. Licencees have to shell out pilotage charges to KPT even if they bring in their own pilots. This too has drawn criticism.

Another cause for concern has been that the proposed container yard to store containers is located about half a kilometre from the berth. This will lead to rise in transportation costs.

The tender has been floated on a BOT basis on as per the Union government's port privatisation policy for major ports. However, there is a significant departure from the tender floated for the construction of a container terminal at the Jawaharlal Nehru Port Trust (JNPT).

The JNPT tender stipulated that the winner of the bid (licencee) build own and operate it. In the case of KPT though, it is essentially a management and equipment supply contract. Only minor civil works like construction of pavements and buildings have to be done by the licencee.

The wharf will be built by a third party. Infrastructure company Afcons is likely to bag this project, according to sources. The licencee as in the case of the JNPT contract will have to pay royalty based on the cargo handled at the port trust.

The last date for submission of bids is December 16. However, an extension has been sought.