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Terminal trouble

Print edition : Mar 09, 2012 T+T-

IT was in 2004 that DP World won the bid to take over the operations of the Cochin Port Trust-run Rajiv Gandhi Container Terminal (RGCT) and develop and operate the International Container Transhipment Terminal (ICTT) through a special purpose vehicle, the India Gateway Terminal Pvt. Ltd (IGT). DP World took an 81.63 equity holding in IGT, the Container Corporation of India (CONCOR) 14.56 per cent, Chakiat Pvt. Ltd 2.75 per cent and Transworld Group 1.07 per cent.

The Cochin Port Trust (CPT) and the IGT signed an agreement to operate the RGCT for a maximum period of eight years within which the ICTT would be developed, and to operate the ICTT for 30 years on a BOT (Build Operate Transfer) basis. The Government of India invested Rs.1700 crore in the project.

In return for leasing out its assets, the CPT was to get one-third (33.33 per cent) share of the revenue earned by the IGT. And therein lies the clue to understanding the troubles that the CPT and its employees find themselves in because of the mega project.

In the agreement, the CPT promised to deepen and maintain the channel and the berth to provide a depth alongside of 16.5 metres. Consequently, the CPT's dredging charges went up substantially from Rs.35 crore a year when the riverine port did maintenance dredging' to maintain the depth at 12.5 metres, to Rs.110 crore a year because it had to undertake capital dredging involving excavation to increase the depth to 16.5 m, this alone with Central support, and to maintain it at that depth.

With the targeted returns from the new terminal failing to come in, the CPT has been forced to introduce several austerity measures and has sought a Rs.100-crore subsidy from the Government of India. We are suffering for no fault of ours. We were forced to implement cost-cutting measures, among them a dearness allowance (D.A.) freeze, curtailment of allowances and a lot of redeployment of staff. The employees are cooperating, but these are things that should never have happened, CPT Chairman Paul Antony said.

Trade unions have already demanded a review of what their leaders describe as the unilateral clauses in the licence agreement between the CPT and the IGT. They argued that DP World had deceived the Port Trust by projecting an unrealistic throughput target and offering only 33.33 per cent of that revenue.

The Cochin Port Staff Association is one of the major trade unions at the port. Its leader, P.M. Mohammed Haneef, said: Let us look briefly at the evolution of this agreement. The original proposal of the CPT Board in 2000[(when the National Democratic Alliance was in power at the Centre] was to develop such a terminal as a joint venture, with the Port Trust having a 26 per cent share. The then government sat on it for two years claiming it would lead to a monopoly, even while it allowed such monopolies in other ports in India. The new agreement meant retendering and more delay. In 2003, we understand, the initial proposal in the first draft was that the wharf frontage, the berth base, should be dredged by the licensee himself. In 2004, without any public discussion about it, this clause was changed to make dredging the responsibility of the port. Why was this change made, even before we set out our bid condition? Who is responsible for this? We are having a close look at the agreement and there are several provisions which we find as strange. Our demand is that it should be reviewed.

Haneef, who is one of the labour trustees on the CPT Board, said the CPT and its employees had been left with most of the burden: Though DP World could operate the RGCT for a maximum period' of eight years while the ICTT was being developed, they chose the path of premature shifting', after completion of a single berth at Vallarpadam a good business strategy that saved them the responsibility to otherwise pay, among other things, an upfront fee, cost of labour and equipment they were using, and so on. About 500 people who were working at the RGCT do not have their jobs now. They have been redeployed and are doing sundry jobs. Now they say they do not have the money to pay our salaries. D.A. has been frozen. Port workers have become the victims of the development at Vallarpadam. We are soon starting an agitation on this. Earlier, the port had registered a profit of about Rs.4 crore every month. The additional expenditure on dredging is now Rs.75 crore. And they are asking us to forego our salaries for it. What type of development is this?

In Puthu Vypeen island, a 10-minute drive from Vallarpadam, the construction of an LNG Receiving, Storage and Regasification Terminal is progressing fast. Under Petronet LNG Ltd's agreement with CPT, the Port Trust is expected to get a share of the revenue for every tonne of gas handled there. The dredging costs are to be shared by the LNG terminal and the CPT.

Said Haneef: We expect the LNG terminal to solve a lot of our problems. But by the time we make real profit out of it, there will be very few employees left in the port. India's major ports had two lakh workers in 1980; now there are only 50,000 employees. In Kochi port, out of the 3,000 people, 500 are ready to take VRS [voluntary retirement scheme]. By 2015, 715 people will retire. Then, only about 1,700 people may remain. But that is when the income will start coming in. The port will be flush with funds. And it is foreseeing such a positive scenario that capitalists and multinational companies are clamouring for the privatisation of ports.

R. Krishnakumar in Kochi