Vizag port scraps deal with consortium
In a bold decision, the Visakhapatnam Port Trust has terminated the concession agreement signed with SEW Infrastructure and its Malaysian partner PRSB for construction of a coal and steam coal terminal in the Inner Harbour for ‘failure to complete work within the stipulated period’.
The project involving an investment of ₹313.39 crore awarded under design, build, finance, operate and transfer (DBFOT) basis following a 30-year concession agreement in February 2012, which was scheduled for completion by October 2014.
The terminal was supposed to have come up in East Quay 1A berth of Inner Harbour with an annual handling capacity of 7.36 million tonne.
Reliable sources told The Hindu that due to failure to repay loan instalments, even the bankers who disbursed loans had scouted for interested parties for a takeover. It is said SEW had also tried to bargain with the port for reduction in gross revenue share of 33.30% which it had committed in the concession agreement. The consortium, which floated a special purpose vehicle SEW Vizag Coal Terminal Private Ltd, to execute the project stopped work for a long time drawing the wrath of the port authorities.
“Following no response to repeated reminders, we have decided to seek fresh bids to complete the project after terminating the agreement,” VPT M.T. Krishna Babu told The Hindu.
Incidentally, this is the first BOT project for which the landlord port had scrapped the agreement. As per the conditions laid down in the concession agreement, the BOT operator can surrender the project provided it agrees to lose its equity.
Later the port has to negotiate with the bankers for transfer of the loan amounts in the name of a new consortium which agrees to complete it and acquire it under ‘as is where is’ condition.
Stakeholders in the port hailed the decision of the trust to scrap the deal to ensure completion of the project by entrusting the unfinished task to some other interested party.
The Visakhapatnam Port, which now has a capacity of 93 million tonne, is investing ₹2,500 crore mostly in BOT projects to achieve a capacity of 125 million tonne in the next two years.
Welcoming the decision, Visakhapatnam Stevedores’ Association president Krishna Kumar said such ‘pro-active’ measures were most welcome to make the port globally competitive.