The export-import trade in Tuticorin has rallied behind PSA-Sical Terminals Ltd after VO Chidambaranar Port Authority (VOC Port) issued a termination notice to the operator following an adverse ruling by the Madras High Court on a petition brought by the entity controlled by Singapore’s wealth fund seeking to settle royalty payment issues.
BusinessLine reported the issue of termination notice on January 21.
PSA-Sical Terminals owes royalty dues of more than ₹1,250 crore to VOC Port Authority from 2011.
In identically worded letters written to the Chairman of VOC Port Authority, the Tuticorin Ship Agents Association, the Tuticorin Customs Brokers’ Association and the Association for Tuticorin Hub Port Development said that a potential shut down of the terminal would be detrimental to Tuticorin as an export gateway and the country.
“We are deeply concerned that in the absence of a sustainable solution to PSA SICAL’s problems, the trade in Tuticorin may be deprived of terminal handling capacity,” Cecil Machado, President, Tuticorin Customs Brokers’ Association, wrote in the latter, a copy of which was marked to the Secretary, Ministry of Ports, Shipping and Waterways.
Merchandise exports
“In December 2021, India’s merchandise exports reached a record high of $52 billion. This is one of the few bright spots of the Indian economy already impacted by the Covid pandemic. The last thing we need is any restriction in the terminal capacity to handle our exports,” Machado wrote in the letter.
While the container terminal operating from Berth No 8 and the planned terminal at Berth No 9 are/will be deep drafted (14.2 meters), the commencement of operations at Berth No 9 is “still at least 2 years away”.
Anand Morais, President, Tuticorin Ship Agents Association, said: “International shipping lines are all upgrading their vessels and we do not want to see Tuticorin port left behind due to any of its container berths not being upgraded. This would only be to the detriment of Tuticorin as an export gateway and the country. In all long-term contracts, there are bound to be issues but our ability to resolve them helps us stand out as an attractive investment destination.”
“Hence, the operations at PSA Sical should continue unhindered with the attendant assurances that the supporting infrastructure of the container freight stations, transporters, Custom House Agents, warehouses and all those who work in them will not lose out as will happen inevitably if a modern terminal is shut off,” Morais said.
The trade bodies pointed out that PSA-Sical Terminals, one of the oldest PPP projects in India, has made significant contributions to the trade and society in the Tuticorin area.
“From 4,000 TEUs (twenty-foot equivalent units) annual throughput in 1998, Tuticorin Port handled 7.62 Lakh TEUs in the last financial year. While a second container terminal, DBGT, became operational from Berth No 8 in March 2014, it was PSA Sical who brought Tuticorin on the world map of container ports,” Morais said.
“We request you to consider a comprehensive relook at the royalty liabilities since the circumstances under which the original obligations were made are no longer relevant. Fortunately, the government appears seized of the matter and that a special committee has been constituted to look into such cases,” Machado added.
PSA-Sical Terminals, the entity that has been running the container terminal at VOCPT since 1998, is 51 per cent owned by PSA International, a unit of Temasek Holdings Pte Ltd, Singapore’s sovereign wealth fund. The terminal has been roiled by tariff issues for many years and is the most litigated public-private partnership (PPP) project in the Indian ports sector.