SC puts Zoom back in Vizhinjam play

The Supreme Court has dismissed petitions filed by a consortium led by Lanco Kondapalli Power, the Kerala government and others on the Rs 5,000-crore Vizhinjam harbour project in Kerala. It asked the state government to consider the financial and technical bids of Mumbai-based Zoom Developers with 15 days.

The container transhipment port project had been awarded to the Lanco-led consortium in May 2008, after which Zoom, whose bid was not considered, had approached the Kerala High Court for re-evaluation. The HC instructed the state government to consider Zoom’s proposal. The Kerala government and Lanco then approached the Supreme Court.

Kerala’s ports minister M Vijayakumar on Tuesday said the government would take appropriate action on the Supreme Court order without delay. “The government doesn’t want to thwart or delay the Vizhinjam port project. All the proceedings of the project — inviting tenders, obtaining security clearance from the Centre etc — would have to be repeated if we take the Supreme Court order at face value,” said the minister, who is also in charge of law, in Thiruvananthapuram.

Zoom had submitted a bid for Rs 270.44 crore (negative), which is the net present value (NPV) of the Rs 447 crore that was offered as grant to the state government over 10 years after commencement of operations.

Minoo Pardiwalla, vice-president, infrastructure, Zoom Developers, said the company’s bid is almost thrice of what is being offered by Lanco, which had submitted a bid of Rs 34.95 crore (negative), which is the NPV of the Rs 115 crore grant offered to the government.

Sanjay Diwakar Joshi, director-infrastructure, Lanco Infratech, a Lanco group company, said the firm will honour the SC verdict.

Although it will be an opportunity loss for Lanco, the bid cancellation will not have any financial implications on the company, Joshi said. “As the project was sub-judice, ever since it was awarded, we had not begun any work and have not incurred any expenses. We had not even signed the concession agreement.”

Lanco had tied-up with Pembinan Radzai Sdn Bhd of Malaysia to execute the work and was to achieve the financial closure over the next two years.

Analysts also feel project cancellation will not have any immediate impact on Lanco’s financials. “As the project was a long drawn one, analysts had not even factored it in the earnings and valuations calculations till FY11,” said a Mumbai-based analyst with an Indian brokerage who did not want to be named.

Awarding the project to Lanco was the second attempt to get Vizhinjam port’s development on track. In the first bid in 2004-06, a consortium of Zoom and two Chinese developers were initially selected and then were not awarded the contract at the last moment citing security reasons.

The Vizhinjam port boasts of a natural 15 meters draft, which can accommodate very large ships and is planned as a transshipment hub in the west coast of India. Currently, the traffic coming to India from western countries gets transshipped at Colombo port in Sri Lanka and at Salalah Port in Oman.