Sterlite puts Vizag Port on notice

Vedanta firm accuses Vizag Port of not maintaining depth; threatens to cancel agreement.

New Delhi: Vedanta Group firm Sterlite Industries has served a notice to Vishakhapatnam Port for terminating pact with the latter, saying the state-owned port failed to dredge the entrance of the cargo berth rendering the project awarded to the company unviable.

Vizag General Cargo Berth Pvt Ltd (VGCB), a 74:26 joint venture between Sterlite Industries and Leighton Welspun Contractors, was awarded the project by Vizag Port for the mechanisation of coal handling facilities and upgradation of general cargo berth at outer harbour of Vizag Port to cater to 200,000 tonnes capesize ships in June 2010 under the public-private partnership.

Vizag Port is one of the 12 major ports in the country, controlled by Centre. VGCB had offered to share about 38 per cent of its annual revenue from the mechanisation of coal handling facilities with Vizag Port to win the 30-year contract.

Alleging Vizag Port of concealing facts at the time of pact, VGCB in the termination letter to the port chairman has said: “VGCB has — from the commencement of commercial operations in January 2013 to date — not been able to cater to any vessel of 200,000 DWT at the GCB which are in fact being diverted to neighbouring ports.”

Stressing that VGCB has already spent Rs 638 crore on the project, the company said that port officials have maintained the depth at the outer harbour approach or entrance channel at 20 metres, as per the contract, despite several requests. This leaves the company with no option other than to terminate the contract.

The state-owned port as per the contract was mandated to dredge and maintain the approach channel at a depth of 20 metre to help capesize ships, the biggest of the dry bulk carriers.

VPT officials, however, could not be contacted for a response. “As Vishakhapatnam Port Trust (VPT) has failed to comply with its obligations and failed to remedy the concessioning authority event of default, we are left with no option but to repudiate or terminate the concession agreement,” the company said in its letter.

It added that the VGCB will not be in a position to make any payments as per the agreement. “VGCB has been patiently following up with VPT on the issue but now we cannot continue to hurt our shareholders. Vishakhapatnam Port has completely failed in its agreement obligation.

Earlier, ABG Infralogi-stics walked out of a 30-year contract to operate a container terminal at Kandla port alleging non-fulfilment of contractual obligations, including dredging.

( Source : PTI )
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