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Workers sit on indefinite hunger strike as PSA SICAL prepares to prematurely shut terminal at VOC Port on February 28

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PSA SICAL Terminals Ltd, the facility majority owned by Singapore's state-owned PSA International Pte Ltd at VOC Port in Tamil Nadu, said it will wind down the terminal on February 28, three years before the 30-year contract ends in 2028, and has notified some 100 workers of its decision to terminate their services, triggering an indefinite hunger strike by employees from Monday to press their demands.

ET Infra has previously reported PSA SICAL's move to shut the 4.5 lakh twenty-foot equivalent units (TEU's) capacity terminal, 51 percent owned by PSA International Pte Ltd, one of the world's top three container terminal operators.

PSA SICAL Terminals, credited with putting VOC Port on the world map of container ports, owes some Rs 2,000 crore in unpaid royalty dues, including interest and penal interest, to the port authority from 2011.

ET Infra could not independently verify how the unpaid dues will be settled by the terminal operator while exiting the contract prematurely.

"The business of our company has suffered in recent times for various reasons including the V O C Port Authority's discrimination against our company (as adjudged by the arbitration panel) in providing lesser draft at our berth, in contrast to the competing terminals in the Port," PSA SICAL wrote in the 1 February notice to workers some of whom who have been with the terminal since starting operations in 1998 - stating that their services will be terminated on February 28.

"Consequent to such discrimination and the related issues, PSA SICAL's volumes have completely dwindled, as a result of which, it has no business and revenue stream to sustain itself," the operator of India's second oldest private container terminal in a state-owned major port, said.

"Moreover, in the on-going arbitration proceeding, in September 2024, the Port Authority has indicated its acquiescence to take over the terminal operated by us and, as agreed between the parties, the survey and evaluation of the assets of PSA SICAL has been completed.

Therefore, the management is taking steps to close down the place of employment and the undertaking, as per Section 25FFA of The Industrial Disputes Act, 1947 on February 28, 2025," it informed the workers.

"Consequently, the management has to terminate your services, by giving one month notice, and compensation as per the requirements of Section 25FFF of The Industrial Disputes Act," it said.

The Tuticorin PSA SICAL Staff Union, affiliated with the Hind Mazdoor Sabha (HMS) and International Transport Workers Federation (ITF), said that PSA SICAL management "has not discussed the premature closure of the terminal" with them.

"Despite working for more than 25 years, no promotions have been given. We consistently struggled to retain our benefits," said a worker, adding that the management has "not settled" their wage revision due from April 1, 2024 as per the Build, Operate and Transfer (BOT) agreement and was exiting the terminal "without making any reasonable settlement to the workers".

The worker's union alleged that PSA SICAL "violated" the BOT agreement signed with the port authority on payment of wages to workers.

"The wages of the employees of the Licensee (PSA SICAL) shall not be less than the wages paid by the Licensor (VOC Port Authority) to its employees for similar responsibilities," according to Clause 6.9.1 of the BOT agreement.

PSA SICAL, according to the workers, has "recovered more than their initial investment within two years of commencing operations". "The equipment at the terminal is old, and most of their lifespan has been completed. They have not been replaced as per the BOT agreement, nor has it been refurbished," the workers union stated.

"PSA SICAL seems to be trying to deceive everyone. The closure of the terminal will render more than 100 workers jobless," a union representative said.

"Most of the staff are aged, and finding employment at this age is particularly challenging. Additionally, many have children who are pursuing higher education, and their future is greatly impacted by the decision to close the facility. The management is trying to settle without compassion. We are seeking a reasonable settlement, grounded in humanity, rather than relying solely on outdated policies," he said.

To be sure, PSA SICAL Terminals has been beset by tariff issues for many years and is the most litigated public-private-partnership (PPP) port project in the country.

In June 2011, PSA-SICAL secured a stay from the district court in Thoothukudi, freezing the annual royalty it is contractually mandated to pay VOC Port Authority at the level set for 2011 as part of the 30-year contract.

According to the terms of the PSA-SICAL contract, the royalty per TEU was Rs102 in the second year of operations. In the 30th year of operations in 2028, it will reach Rs 5,178 for a TEU as the royalty rises by 20 per cent every year in July till the end of the contract.

As a result of the Thoothukudi district court order, PSA-SICAL continues to pay a royalty of Rs 1,969 per TEU (the level set for 2011 in the contract) to VOC Port Authority.

The royalty has to be paid on either the actual volumes handled in a year or on the contractually mandated MGT of 3 lakh TEUs, whichever is higher.

In the 27 years since starting operations, PSA SICAL made three attempts to raise rates for the services provided at the terminal, but each time the then tariff regulator for the Union government-controlled ports slashed rates by 15 per cent in 2002, 54 per cent in 2006 and 34 per cent in 2008, which PSA-SICAL did not implement by securing stay orders from the Madras High Court.

PSA-SICAL defended its move to freeze the royalty pay-out with the backing of the court, arguing that the tariff cuts would reduce the revenue-earning capability of the terminal and turn it into a loss-making unit.

This is because the revenue earned will not be sufficient to cover the cost of operating the terminal after sharing a portion as royalty with the government port every year.

The royalty exceeded the tariffs allowed to be charged by the terminal in 2011 itself. PSA SICAL said that it cannot give more royalty to V O C Port Authority till it is allowed to increase rates.

Susanta Kumar Purohit, Chairman, VOC Port Authority did not respond to multiple calls made to his mobile phone seeking comment. PSA Sical Terminals could not be reached for comments.

Source: ET Infra. Com

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