JNPT shelves container terminal scheme

Mumbai: The board of the Jawaharlal Nehru Port Trust has deferred its decision to set up a new container terminal with private sector participation and may take a re-look at the issue at its meeting scheduled at the end of May 2002.

JNPT was to have awarded the container terminal project by end May 2002 but JNPT workers unions have protested against the privatisation of the container terminal as also at the appointment of Ernst & Young (E&Y) as the financial adviser.

Says JNPT chairman Arun Bongirwar: We havent decided about the project yet; we will take up the matter for discussion at the next board meeting scheduled. The board has decided to go ahead with its plans to appoint E&Y as consultants for the container terminal privatisation programme.

JNPT was all set to issue a global tender for the project. But the port workers came down heavily on the decision and threatened to bring operations to a standstill if the privatisation programme continued. Representatives of the workers unions say they were not against the new project, but wanted JNPT to operate the terminal without any external interference.

Pradyumna Kaul, consultant to the JNPT Workers Union, says E&Y is the financial consultants of P&O Ports and the Port of Singapore Authority (PSO) in Australia and Singapore. P&O and PSA are the main aspirants for JNPTs new container terminal and if E&Y continues as the financial advisor for JNPT for its privatisation programme, there will be conflicts of interest while selecting the final bidder for the container terminal.

Kaul alleges E&Y has falsified figures of the BOT returns as against JNPTs returns. But E&Y says it was only 8 per cent more or equal to BOT when, in fact, it was 30 per cent more in the net present value of the investment stream.

Kaul also objects to E&Y on the grounds that it announced during the Anderson merger that E&Y organisations worldwide were seamless. On the other hand they claim they are operating independently a far as project consultancy is concerned.

Says E&Y director Jayesh Desai: As a professionally managed consultancy firm, we can confirm that there is no conflict of interest in this issue. E&Y India operates independently as far as client services are concerned.

Kaul says JNPT had already sold its one container terminal (Nhava-Sheva International Container Terminal) to P&O. As a result, JNPTs net profits had dwindled down from Rs 235 crore in 1999-2000 to Rs 101 crore in 2000-01. Further, as per the provisional figures, the net profits for the year 2001-02 stands at Rs 102 crore.

He says the present model licence agreement between JNPT and P&O, if implemented throughout the country, will result in forex outflow of $1 billion per annum, which will translate into further devaluation of the rupee by 4-5 against the US dollar.