Vedanta Group firm Sterlite Industries has served a notice to Vishakhapatnam Port for terminating pact with it, saying the state-owned port failed to dredge the entrance of the cargo berth rendering the project awarded to the company unviable.

Vizag General Cargo Berth Pvt Ltd (VGCB), a 74:26 joint venture between Sterlite Industries and Leighton Welspun Contractors, was awarded the project for mechanisation of coal handling facilities and upgradation of general cargo berth at outer harbour of Vizag Port to cater to 200,000 tonnes capesize ships in June 2010.

Alleging Vizag Port of concealing facts at the time of pact, VGCB in the termination letter to the Port Chairman has said: “VGCB, has from the commencement of commercial operations in January 2013 to date, have not been able to cater to any vessel of 200,000 DWT at the GCB which are in fact being diverted to neighbouring ports.”

Stressing that VGCB has already spent Rs 638 crore on the project, it has said that the repeated pleas to port officials to dredge and maintain the depth at the outer harbour approach /entrance channel at 20 metres, as per the contract, has failed and the company was left with no other option than to terminate the contract.

The state-owned port as per the contract was mandated to dredge and maintain the approach channel at a depth of 20m to help capesize ships, the biggest of the dry bulk carriers.

“As VPT (Vishakhapatnam Port Trust) has failed to comply with its obligations and/or failed to cure/remedy the concessioning authority event of default, we are left with no option but to repudiate/terminate the concession agreement,” it said in a letter to Port Chairman.

It added that the VGCB will not be in a position to make any payments to VPT under the concession agreement.

“VGCB has been patiently following up with VPT on the issue but now we cannot continue to hurt our shareholders.

Vishakhapatnam Port has completely failed in its Agreement obligation.

“It is not possible to make this project viable unless the depth of (-) 20 meters is undertaken. Otherwise, investment of such amount can never be viable. It has been our basis for the bid and now we are losing money every day” said VGCB Director Pratik Agarwal.

VPT officials could not be contacted. Vizag Port is one of the 12 major ports in the country, controlled by Centre.

VGCB had offered to share about 38 per cent of its annual revenue with Vizag port to win the 30—year contract.

The project under public-private partnership had began operations in January.

Earlier, ABG Infralogistics Ltd walked out of a 30-year contract to operate a container terminal at Kandla port alleging non-fulfilment of contractual obligations, including dredging the channel by port authority.

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