Sources told The Financial Express that HHI had quoted Rs 243.48 crore (forex component Rs 190.67 crore at Rs 42.10 to a dollar) and while L&T JV's amount was Rs 269.82 crore (forex component Rs 118.05 crore). L&T JV's quoted amount was higher by Rs 24.68 crore but board members Shanti Patel and Ram Gandhi said: "The board cannot be oblivious to the risk of foreign exchange fluctuation especially at this time of currency disturbance world over."

MBPT will soon convey the news to the Asian Development Bank (ADB) which has agreed to fund this project. The agreement for the loan wassigned on September 25 by the Indian Ambassador at Manila. The tenders were invited as per ADB's guidelines.

Patel and Gandhi said that "the foreign exchange fluctuation would affect the cost of the contract and may, in the long run, prove expensive. With this fact staring in the face, it was difficult to consider acceptance of the offer."

Patel argued that comparison of the offers showed that the forex component in HHI's offer was higher than that of L&T. "With the exchange fluctuation having to be borne by the MbPT, there is very high risk in the acceptance of the offer."

Further, even under the clause of duties and taxes, the increase in customs duty beyond the percentage rate indicated will be the port's responsibility and with forex fluctuation, this quantum may also be quite high. Patel said this made the offer risky and it was better to call for re-bids.Mark Fernandes, another board member, agreed and said that with reducing traffic and business, accepting such an offer with so much financialrisks was difficult to accept. He suggested that both firms submit fresh bids with reduced forex component.

SR Kulkarni, another member and veteran trade union leader, said that with the deviations proposed by HHI, even their offer was non-responsive. Thus as per the ADB guidelines, the offers should be rejected and fresh ones invited, he added.

Deputy chairman RR Sinha said that this would, however, lead to costs and time overrun and put the project back by two years. Any delay in awarding the contract would delay the project and lead to payment of commitment charges. "This is besides the fact that the pipelines are overdue for replacement which, if delayed further, are a potential risk," he added.Chairman AK Mago said that a proper tender procedure had been followed in the bids and that evaluation of offers had to be with reference to forex rate on the date of opening of the offer which had been done. In international bidding, there could be no limitation on forex component.Further, foreign exchangefluctuation could not be estimated and, hence, be considered in evaluating the offers. The offer of HHI was as per the tender conditions and was thus proposed for acceptance.

Patel said the bid was conditional and the implication of the conditions had to be taken into account for evaluation. He felt it was better to invite fresh bids, a course of action which would take about six months.