DP World's right to manage and run the first container terminal at India's port of Mundra in Gujarat state has been put to scrutiny and may be revoked.

Local reports say that the Gujarat Maritime Board has convened an investigation and a decision could be reached soon on whether to cancel the existing contract.

The right to operate and develop the some 1.5 million TEU per year Mundra International Container Terminal (MICT) was originally awarded to India's Adani Group.

The Adani Group then sold contract rights to Britain's P&O ports in 2003.

In February 2006 however, DP World acquired P&O Ports which resulted in the transfer of management and ownership of Mundra's container facilities to the Dubai state-owned operator.

According to the Gujarat Maritime Board, the transfer was a breach of an undertaking given by P&O Ports when it acquired the facilities from the Adani Group.

The undertaking required P&O Ports to hold a minimum shareholding of 51% in MICT for seven years from the date of acquisition.

The Gujarat Maritime Board maintains that the company also agreed to seek prior approval before selling any part of its 51% stake in MICT.

Now the Gujarat Maritime Board has issued a show-cause notice to DP World requesting a reason why the contract should not be canceled.

MICT has replied saying that there has been no violation of any agreement as P&O Ports still continues to own 100% shareholding of MICT.

In other developments,DP World is suing the Adani Group for not allowing it to operate the second container terminal at Mundra. (See story link.) 

DP World's acquisition of P&O Ports and its ensuing ownership of certain global terminals have been a source of constant controversy.

DP World came into ownership of several key US port facilities as a result of the P&O Ports acquisition and political furore erupted in the US citing mainly security concerns.

It eventually had to sell its recently acquired six US terminals for an undisclosed sum to AIG Global Investment Group due to mounting opposition against US ports being in the hands of Arab owners.

Industry players have in fact been pointing out how the failed US ownerships have actually turned DP World's focus towards other port sectors such as India's.