India’s biggest channel deepening work at Jawaharlal Nehru Port Trust (JNPT) is heading for litigation with the team of Belgian and Dutch dredging contractors invoking arbitration to recover unpaid dues of ₹200 crore on the contract that was completed in February, 2019.
JNPT had hired a joint venture between Boskalis Smit India LLP and Jan De Nul Dredging India Pvt Ltd through a global tender in September, 2017 after the team placed the lowest quote of ₹1,966 crore to deepen the channel from 14 metres to 15 metres to allow bigger parcel size ships to dock.
The JV has written to JNPT to start arbitration for non-payment of ₹200 crore on the dredging contract. The contractors have also made a claim for ₹130 crore as they were asked to change the scope of work while the contract was in progress by altering the dumping ground for dredged materials and for detention of dredgers, according to government sources in Delhi.
The payment of last three invoice worth ₹200 crore has been denied at the behest of the Shipping Ministry, though, multiple agencies including the National Institute of Oceanography, JNPT, Tata Consulting Engineers (the project management consultant), IIT Chennai and an advisor to JNPT had certified and endorsed the depth completion of the project.
The final payment has been held back on the pretext of some investigation to “discover flaws” in the contract, a government official said.
Since the dredging work was completed, JNPT has received over 150 bigger parcel size ships, generating more revenue to India’s biggest State-owned container gateway, benefitting the port and the country.
Before demitting office in April this year, the then Shipping Secretary Gopal Krishna recommended “further investigation” into the contract on suspicion that the project cost was “inflated” due to cartelisation by foreign dredging contractors who participated in the tender, among other issues.
The dredging project was cleared by the Cabinet Committee on Economic Affairs at an estimated cost of ₹2,029 crore. The winning price bid of Boskalis -Jan De Nul was 3.13 per cent lower than the CCEA approved cost.
Towards the fag end of the work and on the request of Mumbai Port Trust and “instructions” from the Ministry, JNPT changed the dumping ground for rock excavated from the ocean bed, deviating from what was prescribed in the environment and coastal regulation zone clearances for the project. The change was suggested by the advisor to JNPT.
The change came after Mumbai Port Trust submitted a proposal to utilise the dredged rock for reclamation work connected with construction of oil tank farms coming up at 3-4 km from the dredging site. The change in dumping ground on a lump sum depth assured contract was opposed by the project management consultant.
After the work was completed, the Ministry set up two committees to review the completion of the project and other contractual issues. The advisor of JNPT who suggested the new dumping ground and Dredging Corporation of India (DCI), a competitor of foreign dredging firms such as Boskalis-Jan De Nul, were members of the panels.
‘Conflict of interest’
“The advisor who recommended changing the dumping ground was a member of the investigation committee formed to find faults with the project. The advisor’s suggestion created the fault and he sat on the panel tasked with finding faults with the project. This is serious conflict of interest,” an industry official said.
“DCI is a competitor to Boskalis-Jan De Nul. How can a competitor of the JV contractor become a member of the panels investigating the matter? Besides, DCI has been hiring the same foreign dredging firms for sub-contracting work awarded to it by JNPT recently,” he added.
JNPT officials declined to comment. Boskalis-Jan De Nul also declined to comment.