French shipping group CMA CGM’s decision to sell the 50 per cent stake held by its unit CMA Terminals in Adani CMA Mundra Terminal Private Limited (ACMTPL) at Mundra port to China Merchants Port (CMP) has run into trouble following the border dispute with China.
ACMTPL is an equal joint venture between Adani Ports and Special Economic Zone Ltd (APSEZ) and CMA Terminals, a unit of CMA CGM SA, the world’s third largest container shipping firm that runs a 1.3 million twenty foot equivalent units (TEUs) capacity terminal at Mundra port.
On 20 December 2019, CMA CGM announced a plan to sell stakes held by CMA Terminals in 10 port terminals globally to Terminal Link, a joint venture 51 per cent owned by CMA-CGM and 49 per cent by state-owned China Merchants Port as part of the efforts to reduce debt.
On 26 March this year, CMA CGM announced the first closing of its agreement with CMP, with the sale of its stakes in eight port terminals to Terminal Link for an all-cash consideration of $815 million. This list did not include the Mundra terminal.
“The sale of the last two terminals (including in Mundra) covered by the agreement between CMA CGM and CMP should be completed by the end of first-half 2020 for an all-cash consideration over $150 million, pending approval by the competent regulatory agencies,” said CMA CGM in a statement on March 26.
Stake sale being scrutinised
Government sources said the stake sale is being scrutinised in accordance with the guidelines approved by the Cabinet Committee on Security in January 2018 for security clearance of firms in port and dredging projects.
Once security clearance is accorded by Ministry of Shipping to any company, based on inputs from the relevant Ministries/Departments/ organisations for any port project, such clearance in respect of the company would be valid for five years.
However, fresh clearances should be taken if there is any change in management control of the company.
“The concerned companies would be liable to inform the above change to the Ministry of Shipping/concerned port within two weeks, failing which the security clearance already accorded can be withdrawn. This information will be communicated to the security agencies by the Ministry of Shipping within one month of the change taking place for seeking fresh security clearance,” according to the security clearance guidelines.
Besides, the concerned companies would be liable to inform the change of more than 10 per cent in shareholding in the company by any shareholder to the Ministry of Shipping/concerned port within two weeks, failing which the security clearance already accorded can be withdrawn. This information will be communicated to the security agencies by the Ministry of Shipping within one month of the change taking place. In case, as a result of any change as mentioned above, if any security concern is raised in the course of enquiry, the Ministry of Shipping would immediately take necessary action on the findings, says the guidelines.
This security clearance procedure is also applicable to non-major ports, including private ports, set up in Public Private Partnership (PPP) mode in the state sector due to the sensitiveness of the port sector.
“As all non-major ports are under the purview of concerned State Government/UT in which the port is situated, the State Maritime Boards/ State Governments may apply to Ministry of Home Affairs, Ministry of Defence and Ministry of External Affairs to get security inputs on the bidders of the projects at non-major ports, and shall consider the inputs received from the security agencies in consonance with the security clearance guidelines issued by MHA from time to time,” it added.
Source: The Hindu Business Line