Unmesh Wagh, Chairman, JNPA
After a 20-year-long dispute, a tariff settlement has finally been reached between Jawaharlal Nehru Port Authority (JNPA) and Nhava Sheva International Container Terminal Pvt Ltd (NSICT), India’s first terminal developed under the Public-Private-Partnership model at the Jawaharlal Nehru Port in Maharashtra. As per the settlement, NSIC — part of UAE-based DP World — can get ₹705 crore as volume-based royalty discounts, JNPA sources said Saturday.
“It was a long pending dispute and we are happy that after prolonged negotiations, a settlement has finally been reached with entities who signed the first PPP in India. The damage was done way back in 2005. As per this settlement, NSICT can get ₹705 crore as volume-based royalty discounts until the remaining period of the concession. This is a win-win situation for both of us as our royalty will remain intact, and more volumes will fetch NSICT greater royalty discounts. NSICT has magnanimously accepted this formula,” Unmesh Wagh, Chairman of JNPA told the businessline. The concession period expires on 2027-28.
Broadly the agreement will involve additional cargo commitment by NSICT which will enable them to become eligible for volume discounts which will kick in once the volumes touch certain levels. Given that the volumes had gone down to more than half of what they were prior to the tariff dispute this is expected to result in substantial increase in cargo volumes. “This settlement will add a minimum of six lakh TEUs to JNPA’s annual cargo volumes,” Wagh said, adding that JNPA expected the terminal to operate at 100 per cent capacity after this settlement.
In 1997, JNPA awarded a terminal concession to DP World, the authority said in a statement. NSICT, DP World’s Special Purpose Vehicle (SPV), entered into a 30-year concession agreement with JNPA. This marked the first such Public-Private Partnership (PPP) agreement in India’s port sector. The dispute arose in 2005 when full royalty as a cost was disallowed, leading NSICT to file claims totalling approximately ₹2,653 crore against JNPA. Following arbitration proceedings and the conciliation process a compromise formula was agreed.
The settlement determined ₹705 crore as an amount adjustable through future volume-based royalty discounts until the remaining period of the concession. This settlement structure protects JNPA’s revenue while requiring NSICT to increase future volumes to claim volume-based discounts, making it a win-win solution for both parties. This is expected to significantly boost traffic at JNPA, generating higher revenues to the port from vessel-related charges, berth hire, and royalties.
More Like This
Published on April 5, 2025
