| The draft MCA is being discussed by an Inter-Ministerial Group since 2005 but due to differences between the Planning Commission and the shipping ministry it is yet to be finalised. |
| Accordingly, the Cabinet Secretariat has asked the concerned authorities, including the finance ministry, to submit their final views on the matter within 15 days. |
| The MCA is an important document for developing ports in the PPP mode as it spells out the risk allocation of the project between the private agency and the government. |
| The delay in finalising the MCA has impacted pending projects with only 4 out of 15 approved port projects seeing the light of the day in the last fiscal. Construction of berths at many ports has also got delayed due to the same reason. |
| "It was a mistake not to allow construction of ports under the existing rules. Things got stalled on account of the delay in finalising the MCA. Although there was no policy vacuum, new PPP ports were not given permission," said a government official. |
| However, the differences over the upfront tariff system for ports have been sorted out. "The proposal will now go to the Committee on Infrastructure headed by Prime Minister Manmohan Singh. Following that, the proposal will go to the Cabinet or the Cabinet Committee on Economic Affairs for clearance," the official said. |
| Under the current tariff system for ports, a licence is granted to the bidder sharing the highest revenue with the port authority. The successful bidder is also assured a 15 per cent return on capital employed while deciding the tariff. |
| Usually, the bidders quote higher revenue sharing by jacking up the cost of the project and tariff, thus making the ports incompetitive. However, in the proposed upfront tariff system, the ceiling of the tariff will be fixed first, after which the bidding will be carried out on a revenue-share basis. |
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