A contract controversy

The move to award a contract to a foreign consortium for the development of a container terminal at the Jawaharlal Nehru Port faces legal and political challenges.

in Mumbai

ON April 14, just days before Maharashtra went to the polls, Nationalist Congress Party (NCP) leader Sharad Pawar accused the Bharatiya Janata Party-led National Democratic Alliance (NDA) government of compromising national security by "doling out the first bulk terminal [of the Jawaharlal Nehru Port Trust] to P&O, Australia, and the blatant gifting" of another terminal to a Danish shipping firm, Maersk, in association with Container Corporation of India (CONCOR) on a 30-year lease. Sharad Pawar substantiated his accusation quoting the presence of high security establishments in the vicinity of JNPT. He was referring to the Bhabha Atomic Research Centre (BARC), a high-risk site for terror attacks, Nhava Sheva, the Navy's biggest missile, torpedo and ammunition storage, preparation and supply depot on the western seaboard and the Mazagaon Docks, where warships and submarines are built.

Pawar was accompanied at the press conference by the retired former Chief of the Naval Staff, Admiral Vishnu Bhagwat, who was dismissed from service by the NDA government in 1999, over his insistence that the orders given to him were "unimplementable". Bhagwat alleged that often foreign firms acted as fronts for certain "agencies" and it was a security risk to permit them into sensitive areas. Clarifying that during his tenure at the Naval headquarters, the recommendation had been to extend the scope of the facilities around and at the Jawaharlal Nehru port for "national enterprises only", he said that the present situation was such that "a foreign enclave [was in existence] at JNPT".

On April 5, prior to Pawar's announcement, the Election Commission (E.C.) had put on hold the awarding of a contract for a container terminal project at JNPT. The Rs.900-crore JNPT project had been cleared and was expected to be awarded to the Maersk-CONCOR consortium. The bid was valid for a period of 30 weeks from March 25 till December 1, which meant that it could be awarded even after the elections. However, less than a month after the elections, three public interest petitions were filed in the Bombay High Court contesting the bid of the Maersk-CONCOR consortium to develop the third terminal.

The petition filed by Bhushan Patil, JNPT trustee and leader of Nhava Sheva Karmachari Sanghatana, was dismissed by the court on the grounds that the petitioner was extending himself into areas of policy that did not concern him. Patil's PIL had submitted that the port should itself take up the work of developing the third terminal in the economic interest of the country without leaving it to a third party. The other two petitions were filed by Tarun Tripathi, a Chartered Accountant from Navi Mumbai, and Arun Pal Singh Behl from Nagpur. The PIL filed by Tripathi argues that JNPT was making losses owing to the revenue-sharing arrangement, while Behl's petition raises security concerns that were earlier raised by Union Minister for Agriculture Sharad Pawar and Vishnu Bhagwat during the election campaign. While the first two petitioners made JNPT and the Ministry of Shipping as the respondents, Behl's petition includes the Government of India, the Ministry of Defence, the Ministry of Home and others as respondents. It did not include the JNPT or the Ministry of Shipping.

JNPT currently handles over 2 million containers every year and the traffic is likely to go up to 2.7 million containers by 2005-06. The development of the third container terminal is expected to add 1.3 million containers to the overall capacity on its completion by 2005-06.

It is not clear whether it is an issue of conflicting business interests pulling political strings to get the deal or whether national interest is being jeopardised as alleged. Why a straightforward bidding process should be mired in PILs is not plain, considering a statement made by D.T. Joseph, Secretary, Shipping, in April after the E.C. had stayed the awarding of contracts. He had expressed confidence that the contract would be awarded after the elections. There was no ambiguity in the JNPT project and the new government was unlikely to review the project, he said.