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State-owned Visakhapatnam Port Authority has terminated a contract awarded to AVR Infra Pvt Ltd (AIPL), a unit of Chennai-based IMC Ltd, a few years into the 30-year concession for developing and operating the Eastern Quay Beth-10 (EQ-10) at the Southern port for defaulting on the minimum guaranteed throughput (MGT) obligations, a top official has said.IMC Ltd is India’s top independent bulk liquid storage company.

The concession agreement for the 1.84 million tonnes (mt) capacity EQ-10 berth located in the northern arm of the inner harbour of Visakhapatnam port was signed on 16 August 2010 for handling liquid cargo (Class B & C chemicals including caustic soda, phosphoric acid, edible oil, biofuel, etc).

AVR Infra quoted the highest revenue share of 19.08% to the port authority to emerge the successful bidder for the project in a tender. The terminal started commercial operations in January 2017. According to the contract terms, AVR Infra was mandated to handle some 4 lakh tons as minimum guaranteed throughput a year. However, AVR Infra failed to comply with the MGT obligations for any of the six years since starting operations. The port authority can terminate the contract if the private operator fails to meet the MGT obligations for three consecutive years, per the concession agreement. AVR Infra got a reprieve from termination during COVID since the pandemic was treated as force majeure - a clause that absolves firms from meeting their contractual commitments for reasons beyond their control. More than three months ago, the port authority issued a termination notice, giving 90 days’ time to terminate the concession, per the contract terms. At the request of AVR Infra, a further notice period of 45 days was given, which will end on 18 January 2025.

The EQ-10 berth, though, is debt free and this absolves the port authority from paying 90 percent of the debt due as termination payment per the concession agreement.“Luckily, there is no debt for the project. The project promoter has paid the bank dues,” said another source briefed on the project.

The port authority, according to its Chairman Dr Angamuthu, plans to run the EQ-10 berth by itself, after improving the cargo profile.