PSA International Pte Ltd will open a new container terminal at Jawaharlal Nehru Port Trust (JNPT) — its first on India’s western seaboard — on Friday, hoping to erase bitter memories of an earlier tender for the same project which is now the subject matter of a damages suit filed by the state-run port authority.

PSA, a unit of Temasek Holdings Pte Ltd, the sovereign wealth fund of Singapore, is one of the world’s top three container terminal operators.

In October 2012, JNPT withdrew the letter of award given to a consortium led by PSA after the group failed to sign a concession agreement — a document that sets out the terms and conditions of a port contract — even a year after it was awarded the project in September 2011 in a public auction.

JNPT subsequently encashed the bid security of ₹67 crore submitted by PSA for the ₹6,700-crore project that was designed to load 4.8 million standard containers a year.

The consortium of PSA and local firm ABG Ports Ltd (now renamed Star Port Ltd) was awarded the project after it quoted a record high revenue share then of 50.828 per cent in a public tender.

The winning bidder has to sign the concession agreement within 30 days of accepting the letter of award for the project, according to tender conditions. Despite repeated extension of time, PSA didn’t comply with this requirement, citing lack of clarity over registration of concession pact and payment of stamp duty thereon.

When the project was re-tendered in June 2013, PSA applied on its own — it was allowed to participate despite calls for exclusion from the tender for the earlier fiasco — and won the auction again after emerging as the highest bidder. It offered a revenue share of 35.79 per cent, which was 15 per cent lower than the 50.828 per cent quoted in the earlier round in 2011.

The scrapping of the first tender and the consequent delay raised the project cost by as much as ₹1,215 crore to ₹7,915 crore and pushed back the construction of the new facility by at least five years, resulting in loss of business/opportunity costs, JNPT said in a legal claim seeking liquidated damages of over ₹500 crore. The liquidated damages claimed by JNPT were rejected by an arbitration panel and JNPT has filed an appeal in Bombay High Court.

Early entrant

PSA was one of the first global port operators to invest in India when the country opened its major ports to private funds in the late 1990s. It runs facilities at Chennai Port Trust, VO Chidambaranar Port Trust and Kakinada port, all on India’s eastern coast.

Its first facility in India at VOCPT has been roiled by regulatory, rate and legal issues for many years. Joint venture PSA-Sical Terminals Ltd is fighting to save royalty arrears of some ₹900 crore it owes VOCPT.

In 2017, the Madurai Bench of the Madras High Court accepted an appeal filed by VOCPT against a lower court decision to freeze the royalty payment by PSA-Sical Terminals at the level set for 2011 on a 30-year contract that began in 1999.

The order, though, was stayed by the Supreme Court on an appeal filed by PSA-Sical Terminals.