Adani hands back coal terminal to Visakhapatnam Port Adani Ports and Special Economic Zone Ltd (APSEZ) has handed a coal handling terminal back to Visakhapatnam Port Authority. APSEZ was only a few years into a 30-year contract it was granted to operate the facility. The move was unusual but prompted by the fact that changing business conditions had made the business no longer viable. The handing back of the terminal was on the order of an arbitration terminal, which ordered the return after the port authority paid 1,550,000 rupees ($20,000) in compensation. APSEZ, which is India’s biggest private port operator, will continue to pursue its arbitration case regarding the decision and has mounted a separate legal challenge in the Andhra Pradesh High Court. This aims to establish whether the terminal was ‘first’ terminated by it or the port authority. Winning this case is vital for APSEZ if it is to participate in tenders issued by state-run ports for cargo-handling contracts, since it may well be in violation of conditions set out in such contracts in respect of qualification. Indeed, APSEZ was barred by the port authority from participating in the tender for mechanization of West Quay Berths 7 and 8 at the port. Although APSEZ challenged the exclusion, it lost the case, but has since launched an appeal. Visakhapatnam Port Authority issued a consultation notice to APSEZ subsiary Adani Vizag Coal Terminal Pvt Ltd (AVCTPL) on 3 October 2020, in which it cited a failure to achieve the minimum guaranteed throughput stipulated in the coal terminal contract. The company rejected this, pointing out that business had been adversely impacted by the pandemic and therefore sought mutual termination of the contract. It then sent its own termination notice to the port authority and, in November 2020, invoked an arbitration clause. The port authority subsequently issued a final termination notice, stating the contract would end on 23 April 2021. In December 2021, the arbitration panel issued an interim award to be paid by the port authority. APSEZ notes that its coal terminal contract was one that involved the handling of imported steam/thermal coal and that this collapsed after the government made policy changes to promote the use of domestic coal, thereby reducing imports and negatively hitting volumes of imported coal handling by the terminal. Barry Cross
Cargo of Every Flavor.
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