Malaysian crane manufacturer IMPSA has backed out of a contract to equip India'a largest container handling facility at Mumbai's Jawaharlal Nehru Port with three mega-sized quay cranes worth more than INR10 billion (US$249 million).
The port had originally intended to purchase three super post-panamax rail-mounted quay cranes (RMQC) which move on custom-made tracks for loading and unloading containerised cargo at berth.
JN Port chairman SS Hussain was quoted as saying in a Wall Street Journal report on Livemint.com: "They have informed us they cannot deliver the crane on time and want to revise the price upward, for which the port needs further government approvals," he said.
"There is a penal provision for breaching the contract. Though we will take action against the Malaysian company, we will also explore the option of hiring such big cranes to replace some older ones at the port."
The report cited an unidentified source as saying the reason the deal fell through is because the Malaysian crane manufacturer is in financial turmoil and going through a restructuring process.
Port authorities have also written to IMPSA to find out the reason for failing to meet their end of the bargain. The authorities are now concerned that the delay over the delivery of the quay cranes will slow down the flow of containers at the port and lead to container backlogs.
The report said the contract was signed early last year and the cranes were due for delivery by May or June before the monsoon season begins. JNPT will now have to start the lengthy process all over again to receive bids for a suitable crane manufacturer and seek relevant government approvals.
One shipper speaking on request of anonymity said, "Container backlog has already started way before the monsoons. With frequent breakdowns of old RMQCs at the container terminal, the monsoon is going to be a time of congestion."
JN Port has already installed eight similar cranes, and the three new ones would have been destined for the port's main container terminal. This would have allowed the operator to reposition two 19-year-old cranes to a terminal for smaller vessels.
Sixty per cent of India's container trade is said to pass through JN Port which registered a box throughput of 4.06 million TEU in fiscal 2007-08, an increase of 23 per cent against the previous year. In spite of the port's overall strong growth, the box terminal managed by JNPT suffered negative growth of 3.81 per cent during fiscal 2007-08.
"The state-run terminal's crane productivity has come down to 17 moves per hour compared with 17.8. This has happened mainly because of ignorance of ministry of shipping and lapse of time in inviting tenders for cranes," said an unnamed shipping line representative who uses all three terminals at the port, including JNPT.
"JNPT was late by at least six years in replacing its quay cranes. The port is now trying to satisfy with conservative growth projections in order to mitigate the delayed crane procurement. The port could have handled easily close to five million container units instead of 4.06 million units," he added in the report.
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