Janardhana Rao, Managing Director, Indian Ports Association, speaks to Janaki Krishnamoorthi about the reforms underway in major ports.
What is the existing capacity of major ports and how many projects were awarded in 2013-14? The existing capacity of major ports as on 31-3-2014 is 800.52 million tonnes. During 2013-14, thirty projects have been awarded entailing an investment of Rs 20,700 crore, which will create a capacity of 220 MMT.
What reforms were introduced in major ports by the government and what are in the pipeline? There have been several initiatives taken up by the government to increase the capability of major ports. In order to attract private investment and build capacity, a well-structured PPP regime has been developed by the Ministry. Investor friendly Model RFQ (Request for Quotation), RFP (Request for Proposal), Model Concession Agreement (MCA) have all been released serving as standard documents to ensure transparency and objectivity. Land policy has been revised to ensure leverage of land for port traffic with port-user friendly and transparent bidding system. The financial powers of the Ministry have been enhanced to Rs 5000 million in line with NHAI which facilitates faster project clearance.
Tariff regulation has been converted into a service level regulation to create a level playing field. Tariff guidelines for major ports which were transformed from cost+ basis to normative basis in 2008, have been further revised in 2013 to make it performance related and in line with the market-driven environment. Tariff for PPP projects are announced upfront before bidding takes place.
There are several measures underway and in the pipeline. Two major ports are proposed along the coastline of Andhra Pradesh and West Bengal under the PPP mode. The Union Cabinet has approved them and necessary action has been initiated. A committee has been constituted to review the hinterland connectivity by both road and rail. The committee while identifying the gap in the connectivity between the ports and the hinterland will prepare a short term (5-year) action plan to address the immediate needs and a long term master plan to ensure that each port has minimum 4-lane road connectivity and double line rail connectivity. The connectivity with the ports will complement the national road network undertaken by NHAI (National Highways Authority of India). In this context, the north-east dedicated rail freight corridor connecting Delhi and Mumbai/JNPT is already in progress. The second and third stage of the DFC (Dedicated Freight Corridor) is likely to come up between Delhi & Kolkata and Delhi & Chennai. The DFCs will improve connectivity and ensure seamless flow of cargo.
Stevedoring policy and dredging policy are being reviewed to capture the market dynamics and enhance productivity. A policy decision has been taken to promote coastal shipping to boost the modal split of cargo transport through inland waters and coastal movements.
What are the roadblocks to introducing reforms in major ports? There were some roadblocks in terms of clearances but the government has been identifying them and eliminating them from time to time through concerted efforts. Now, security clearance system, project clearance mechanism and environmental clearance process have been streamlined and implemented. This alone ensured clearance of many PPP projects during the last decade.
What are the advantages and disadvantages of corporatisation? Why has corporatisation of major ports not yet taken off, despite the government's decision to do so almost a decade back? Corporatisation, in general, is desirable because corporate entities, covered under the Companies Act, will have more autonomy in terms of project execution, pricing and governance. It will, per se, lead to better productivity and also better incentives to employees/officers. Port Trusts will also have access to capital markets to meet their capital and revenue needs.
However, IPA would not like to comment on the corporatisation of major ports as it is a policy decision of the government.
Ennore Port, which was corporatised, is not considered a big success. What is your view on this? We strongly believe that Ennore Port is a big success story. Decision making has been faster as compared to Port Trusts and the port is progressing well with a number of ongoing projects and those in the pipeline. The traffic growth at the port during the last 5 years has been phenomenal - it has reached 27 million tonnes in 2013-14 from 11 million tonnes in 2009-10.