JSW Infrastructure set to win Murbe port deal as Swiss Challenge tender fails to attract bidders – ET Infra

MUMBAI: Mumbai-listed JSW Infrastructure Ltd is set to win the rights to build a new port at Murbe in Maharashtra’s Palghar district with an investment of about Rs4,259 crores after a global tender floated by the state government on a so-called Swiss Challenge method to elicit competing offers failed as expected.

“The tender did not receive any competing offers,” said a Maharashtra Maritime Board (MMB) official.

The Swiss Challenge tender was resorted to by the Maharashtra Maritime Board (MMB) after Sajjan Jindal-led JSW Infrastructure – India’s second biggest private port operator – placed a suo moto proposal to build the new port, some 40 kms away from the Vadhavan port being developed by the Union government in the same district.

Under the Swiss Challenge method, the entity that made the original offer (JSW Infrastructure) is given a chance to match the highest bid discovered through an open auction. If the entity that had put in the original offer declines, then the deal is given to the highest bidder.

“The proposal submitted by JSW Infrastructure will now be scrutinised and sent to the government for approval after which it will be awarded,” the MMB official said.

Murbe, located between Ucheli Creek and Satpati Creek, is planned to be built on a public-private-partnership (PPP) – Design, Build, Own, Operate. Transfer (DBOOT) model.

The bidder offering the highest minimum assured annual income (commercial offer) to MMB was to be nominated as the preferred bidder in the tender.

The commercial offer of the original project proponent (JSW Infrastructure) would be compared with that of the preferred bidder discovered through the tender. If the commercial offer of JSW Infrastructure is not preferable to that of the preferred bidder, the original project proponent shall be given an opportunity to make his commercial offer competitive with that of the preferred bidder within a period of thirty days from the date on which it is given the opportunity.

If the original project proponent fails to do so within the said period, MMB will enter into further discussions with the preferred bidder to finalise the successful bidder ahead of issuing the letter of award for the project, according to the bid documents seen by ET Infra.

This condition made the tender unattractive for potential bidders as JSW Infrastructure was given the right of first refusal to match the highest bid discovered in the auction, rendering it a meaningless exercise for other interested parties.

The proposed Murbe Port is connected to NH-8 via a 4-lane state highway (Boisar Road) located approximately 23 km away. The state highway connects NH-8 to the Maharashtra Industrial Development Corporation (MIDC) area.

Major industrial centres and business hubs in the hinterland of the proposed port enhances the port’s potential to cater to a diverse range of cargoes. The proposed port’s hinterland includes the Maharashtra Industrial Development Corporation Area (MIDC), Tarapur Industrial Area (TIA) in Maharashtra and the Vapi and Valsad Industrial Area (VIA) in Gujarat. “The proposed port may readily cater to the needs of these industries,” MMB wrote in the bid documents.

Maharashtra government sources said that JSW Infrastructure has proposed building a new port at Murbe after its plan to develop a facility at Nandgaon-Alewadi in Thane district ran into protests from locals and fishermen from the area, making it a non-starter.

But, with the Union Cabinet giving final clearance to the Vadhavan port project on 19 June, port industry sources are apprehensive of two new ports being built in close proximity and the resultant impact on viability.

JSW Infrastructure is said to be keen on constructing a new port at Murbe to cater to the growing captive needs of the parent JSW Group.

A port industry source, however, said that JSW Infrastructure could have looked at Vadhavan port for their expansion needs when tenders are floated for cargo handling contracts on PPP basis instead of pursuing a new port at Murbe which is expected to face strident opposition from locals.

Murbe would be the second greenfield port contract for JSW Infrastructure in recent months.

The company was awarded the rights to construct and run a new port at Bhavikeri Keni village in Ankola taluka of Karnataka’s Uttara Kannada district with an investment of Rs4,118.84 crores.

India’s second biggest commercial port operator quoted a royalty of Rs17.25 per metric ton (mt) of cargo handled to win the Keni port deal from the Karnataka government. The royalty will rise by 2 percent annually, per the Karnataka Minor Port Land Allotment Policy. The “blended royalty” will be irrespective of the cargo handled, including containers.