21.04.2008

Crane manufacturer cannot deliver then ups price

Malaysian port crane manufacturer IMPSA has backed out of a contract and wants to up the price. The contract was awarded early last year and cranes were to be delivered by May or June.

However in a move that may hamper operations at Jawaharlal Nehru Port, the country’s biggest container port, IMPSA (Malaysia) SDN BHD has backed out of a contract to provide three super post-panamax size rail-mounted quay cranes worth more than Rs100 crore.

“They have informed us they cannot deliver the crane on time and want to revise the price upward, for which the port needs further government approvals,” said S.S. Hussain, chairman of JN Port.
“There is a penal provision for breaching the contract. Though we will take action against the Malaysian company, we will also explore the option of hiring such big cranes to replace some older ones at the port.”

Reports suggest that the Malaysian crane company is facing a financial crisis and going through a restructuring. Port authorities said they have written to IMPSA seeking reasons for their backing out of the deal.

JN Port could see serious container handling backlogs from this decision. The contract was awarded early last year and the cranes were to be delivered by May or June, before the monsoons set in.

“Container backlog has already started way before the monsoons. With frequent breakdowns of old cranes at the container terminal, the monsoon is going to be a time of congestion,” said a shipper.

The port handles 6 percent of the country’s container cargo. It handled 4.06 million twenty-foot equivalent (TEU) containers in 2007-08, against 3.30 million units in 2006-07, an increase of 23 percent.

JN Port, which has eight similar cranes, was planning to position the three new cranes at its main container terminal berth. It also planned to move two 19-year-old cranes to a smaller terminal where small-sized vessels call.