There was a time, particularly during monsoons, when ships had to wait for days to get a berth at the Mumbai port. Shipping lines used to levy congestion surcharge making Mumbai one of the costliest ports in the country.

To ease this congestion, 25 years ago a new port was created at Nhava Sheva islands across the sea.

This first hi-tech port has several other firsts to boast of. It was named after the first Prime Minister of the country; its first chairperson was the first women IAS officer in the country; it has achieved several records in container handling. It was supposed to be the first transhipment hub on the western coast. And some bureaucrats in the Shipping Ministry used to refer it as the Star port.

Today, Jawaharlal Nehru Port is the largest container port in the country, accounting for over 50 per cent of total containerised cargo handled by all the major ports together. And the port has ambitious expansion plans.

According to the port management, execution of projects worth Rs 14,000 crore will begin from this year which will take the port's annual capacity to 10 million twenty-ft equivalent units (TEUs) from the current 4.32 million TEUs. The long-term plan includes investment of another Rs 45,000 crore by 2020 for a fifth container terminal and a new port complex. Grand plans, indeed!

But if the way things have gone in the recent past is any indication, JN Port will soon go the Mumbai way. Of late, the port is facing congestion due to various factors including agitation by project-affected people; go-slow by employees at the private terminals; space constraints at the container yard; delay in evacuation of containers; and frequent shutdown for maintenance and repairs.

Besides, upset with tariff regulations, the private terminals operating at the port have threatened to cut volumes. If they carry out the threat, port users fear diversion of traffic from JN Port to other ports on the western coast.

In any case, the overall situation is unlikely to improve anytime soon. This is because some key projects, vital for the port's growth, are unjustifiably delayed by disputes, litigation and indecision.

Take for example the two projects — the fourth container terminal and the project for dredging the main navigation channel. Both these projects have become unique examples of how vested interests and apathy on the part of the decision-makers cause project delays and cost escalation. By the port's own admission, the cost of the proposed fourth terminal has gone up by 25 per cent to Rs 8,500 crore from the earlier estimate of Rs 6,700 crore.

The cost of dredging has almost doubled to over Rs 1,500 crore in the past four years, since the first tender was floated in 2008.

Let us look at how these projects are moving ahead.

fourth container terminal project

The fourth container terminal, the project that promises to bring the largest foreign direct investment in the port sector, was awarded to a consortium led by PSA International of Singapore nearly a year ago. Till today, the project has not moved beyond that. In January, PSA backed out at the last moment from a ceremony scheduled in Delhi to sign the project's concession agreement. The excuse was that PSA was not aware that it will have to pay stamp duty for registering the signed document. The matter has been referred for adjudication.

All of a sudden, another issue came up. Partners in the consortium, ABG Ports in Mumbai and PSA decided to part ways. PSA is said to be prepared to take up the project on its own. But the issue is whether the bidding norms allow it to do so. The project was awarded to a consortium and not to a single party. The matter is now with the Shipping Ministry.

The question is why ABG chose to exit the consortium. ABG apparently wants to bid for the 330-m container handling facility at the JN port. Being a part of the PSA consortium, ABG was not eligible to bid for another project at the same port. So the best option was to exit the consortium.

However, many in the port circles believe that this was part of a strategy to delay the fourth terminal project. The PSA-ABG team was awarded the project after it emerged the highest bidder offering to share 50.82 per cent of the annual revenue with the landlord port, making it the highest revenue share quoted by a private firm for a port project.

The port circles are agog with rumours that PSA is trying to wriggle out of the project as it thinks it overbid the project. If the Shipping Ministry decides not to allow PSA to take up the project alone, the JN Port Trust has no option but to go in for re-tendering. This means the project will not only be delayed further but its cost will also go up.

Back in 2010, the tender for the project was delayed by more than a year as APM Terminals, a private terminal operator at the JN Port, challenged the port trust's decision not to allow it to bid for the project since it was already operating a terminal at the same port. (Gateway Terminals India, a joint venture between APM Terminals and Concor, operates the third container terminal at the JN Port.)

Ridiculously, after winning its right to bid for the project in the court, APM had a change of mind; it decided not to bid. There was another hurdle. Adani Enterprises, another bidder for the project, moved court challenging the Government's decision to deny it security clearance. The case was rejected, but it delayed the bidding by another month.

The Shipping Ministry seems to be in a dilemma. If it gets tough, PSA may walk out and the Ministry will be blamed for losing huge foreign investment. If it goes soft, PSA will come out with new demands and the project will be delayed.

Dredging project

The second project — dredging the main navigation channel to deepen the port's draft to 14 m — has been delayed for five years. When the bid was called for the first time in 2008, there was only one bidder who quoted Rs 1,000 crore, more than the budget of Rs 800 crore. After five years now, the Government has approved the project worth Rs 1,571 crore.

In the second bid, three parties comprising Dutch and Belgian firms were shortlisted. The South Korean firm, Hyundai Engineering and Construction Co, which was initially disqualified from bidding, was later allowed by the Shipping Ministry.

Hyundai was disqualified as the dredger it had offered for the work did not meet the age norms specified in the tender. The port may now have to allow other parties to revise their bids. The project is now slated to be completed by 2014 instead of the earlier estimated 2010.

Though some of the factors that held up these projects are beyond any body's control, the Ministry of Shipping and the JN Port Trust could have played a better role in avoiding these unjustifiable delays.

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