Mumbai Port Trust terminal future in limbo

After the central government’s refusal to put Indira Container Terminal for a rebid, the Mumbai Port Trust (MbPT) is brainstorming on the future of the facility.

In a recent Cabinet Committee on Economic Affairs (CCEA) meeting, the proposal to put the Mumbai offshore container terminal for rebid in order to restructure the stalled project was rejected.

As per the proposal forwarded by MbPT, the cargo’s profile was to be changed from containers to automobiles. Currently, the incomplete terminal is being utilised as a roll on-roll off (RoRo) facility to ship Indian-made vehicles. As a backup measure, in the event of a third passenger cruise liner coming to Mumbai, this same terminal will be utilised for passenger purpose.

When asked about the termination of the contract with Gammon Infrastructure in tie-up with Dragados SPL of Spain, a shipping ministry official said, “We are yet to decide on sending a termination notice. But the existing contract will have to be terminated.”

At the moment, the MbPT is brainstorming on what should be done with the terminal once the contract gets terminated. “We don’t know what is the future of this offshore container terminal. Currently, interim operations are going on. We haven’t stopped anything,” an MbPT official told DNA Money.

This stressed facility by the name Indira Container Terminal owes just over Rs 800 crore to Canara Bank-led five banks, including Punjab National Bank, Central Bank of India, United Bank of India and India Infrastructure Finance.

In October 2018, Canara Bank had sought bids to get the incomplete facility ready as per the original plans, but it did not receive any response.

Though the concession agreement inked is for a revenue share of 35.064% to MbPT, during the interim measure to operate as a RoRo terminal, the terms were renegotiated and the port is now taking 55% of the revenue share. 

The terminal’s annual turnover is around Rs 100 crore, and the lenders get about Rs 25 crore towards debt servicing.

The banks are willing for a one-time settlement for this truncated project and the settlement amount agreed upon is Rs 477 crore. The initial project cost was around Rs 1,100 crore.

As per the original plan, as part of the first phase, Indira Container Terminal was to handle 8,00,000 containers (twenty-foot equivalent units, or TEUs) annually, from 2010. 

The entire project when ready, was to handle a million TEUs.

However, MbPT did not fulfil the conditions precedent of dredging the approach channel to the requisite draught and laying of rail line. The company officials claim that if the port authorities executed conditions precedent, they would have installed quay cranes to make the terminal operational for containerised cargo.

This non-fulfilment of conditions precedent has resulted in the special purpose vehicle incurring losses and defaulting on the repayment of debt obligations. 

Gammon Infrastructure Projects has filed a writ petition in the Delhi High Court seeking implementation of rebid decision taken during the Niti Aayog meeting held on March 20, 2018.

There was also a delay from the special purpose vehicle in getting security clearance to procure cranes from China, which was eventually rejected, resulting in a deadlock.

SEE-SAWING FORTUNES

• Rs 800 cr – The Indira Container Terminal owes to a consortium of five banks
   
• Rs 100 cr – The offshore terminal’s annual turnover at present
   
• Rs 25 cr – The lenders get towards debt servicing annually