PSA International’s growth aspirations in India have received a jolt after the country’s southern Tuticorin Port authority, also known as V.O. Chidambaranar (VOC), last week issued a notice of termination to PSA-Sical Terminals over long unsettled royalty obligations.
“To date, PSA Sical has not paid the royalty dues nor approached this port for payment of the royalty dues. In terms of Article 13.4.5 of the License Agreement, the 90 days period of termination notice expired on 19 April 2022. As the default continues, this port hereby issues a termination order. Necessary action shall be taken by the port to take possession of the licensed premises and recovery of the dues payable by PSA Sical as per the license agreement,” VOC stated.
The issue has its roots in the complexities around government tariff guidelines for projects awarded under the build-operate-transfer (BOT) development model in the initial stages of port privatisation in the country. PSA Sical began operations in 1998, designed with an annual capacity of 450,000 TEU.
The termination blow comes as PSA is in the midst of Phase II development of its high-stakes terminal investment (BMCT) at Nhava Sheva/JNPA.