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Jawaharlal Nehru Port Trust to compensate Dubai Ports World in case of delay - 2013-06-18

Union government-controlled Jawaharlal Nehru Port Trust (JNPT) will compensate Dubai Ports World if the private container operator faces trouble while operating a new container terminal at the port's facility in Mumbai. The compensation could either be in the form providing another location to set up the facility or could even be a financial one, according to officials at the port. The move is currently being discussed by the Ministry of Shipping and Jawaharlal Nehru Port Trust.

Dubai Ports World (DP World), among the largest container terminal operators in the world, emerged winner for developing the port project, but has been unable to sign the concession agreement since then. The signing of the concession agreement has been delayed as the operator does not want to operate in the area allotted to it as it's marked as a mangrove forest area.

"We want them to sign the agreement at the earliest. The ministry also wants DP World to sign the agreement and proceed with the development of the project. If there's any trouble, we are ready to compensate the operator by providing land elsewhere," said a senior official at the port.

The container terminal is crucial for the country's largest container port as it will help in reducing congestion at the port which has been fast losing cargo to other private ports on the west coast due to congestion. JNPT recorded a 2.5% drop in cargo handled last year and experts attributed this to capacity constraints.

The project is estimated to cost Rs 800 crore and will have a capacity to load 800,000 containers a year. DP World was awarded the contract after it agreed to share 28.09% of its annual revenue with the port last year. More than 15 of the 27 hectares that was awarded to DP World is covered by mangroves and the state government rules do not allow deforestation of land. A senior official at the Ministry of Shipping, meanwhile, said that it is now looking into the concerns of the port and a decision is expected soon.

JNPT has also invited bids from private port operators to set up a fourth container terminal at the port estimated to cost Rs 8,700 crore. The container terminal is crucial for the port as it can provide relief to vessels waiting at the port and reduce capacity constraints. Port operators including Adani Ports, Essar Ports, APM Terminals and DP World are expected to bid for the project.

Source: The Economic Times