PSA-JNP deal breaks up

9/20/2012

Reports in India suggest that PSA International’s (PSA) tender to build a fourth container terminal in the country’s largest port complex, Jawaharlal Nehru Port, has been terminated.

This follows PSA’s partner, ABG Ports, withdrawing from the project earlier this year and PSA, which had an estimated 74% stake in the project, itself failing to sign the concession agreement before the deadline date expired – believed to have been at the end of August.

It appears as if concerns over the financial viability of the project had intensified, particularly given recent softer trade growth scenario, both globally and for India.

During a recent meeting in Singapore, PSA refused to discuss the JNP issue with a spokesman, declaring that it did not comment on "rumours".

The development is unwelcome news to both JNP and India as a whole, as well over 60% of the country’s containerised cargo is moved in/out of the JNP area. The port is already heavily congested and desperately needs new container-handling facilities.

The fourth container terminal was to have a throughput capacity of almost five million teu, effectively doubling the port’s current throughput capacity. The first phase (2.4 million teu) was due to come onstream in 2015.

While the plan to add another container terminal has not been stopped, it means that the port authority will have to re-tender the project and this will mean further delays.

PSA and ABG Ports, had secured the US$1.5 billion 30-year build, operate and transfer contract in September 2011.

Currently, JNP has three box terminals, with DP World, APM Terminals and the port authority running one each.