Ports' corporatisation pace slow

REALITY CHECK PART II

The government's performance in the ports and shipping sector has been mixed. While the government has scored on the privatisation front "" five container terminals were handed over to private parties in the last five years "" it has failed to make any noteworthy progress on port corporatisation.

The government's track record on fund utilisation too is hardly encouraging. There has been a consistent decline in the utilisation of the outlay for the ports sector.

While for the Ninth Plan (1997-2001) period, the utilisation was 73 per cent, it fell to 53.09 per cent in 2002-03 and was just 31.57 per cent in the April 2003-February 2004 period.

Also, the introduction of a tonnage tax, mooted five years ago, continues to elude the shipping sector. This, despite Finance Minister Jaswant Singh's promise to seriously look into it in his interim Budget.

The introduction of the tonnage tax is vital for the sector, especially since the share of Indian tonnage globally has been flat at 1.3 per cent for three years in a row since 1999-2001.

The proposal to corporatise ports and bring them under the purview of the Companies Act, 1956, first came up in 2001, when the Ennore port was set up as a corporate entity. A Bill to amend the Major Port Trust (MPT) Act, 1963, was introduced in the Lok Sabha in the same year.

The Bill, however, lapsed with the dissolution of Parliament. Four ports, the Jawaharlal Nehru Port, and the ones in Haldia, Goa and Mangalore, were on the corporatisation agenda of the present government.

The success rate in implementing private projects identified in the ports sector also leaves a lot to be desired. Of the 38 identified projects worth Rs 7,640 crore, only 45 per cent have received a total commitment of Rs 3,247 crore.

The fate of the remaining 21 projects remains uncertain, with around 10 reaching only the bidding stage and the others still at the processing stage.

The government, however, took policy measures to allow major ports to compete with private and minor ports. The Tariff Authority for Major Ports (TAMP) bounded tariffs at major ports by introducing a ceiling instead of a floor.

Other initiatives by TAMP include reducing vessel-related charges for container ships at the ports of Cochin, Tuticorin and Chennai to the levels of Colombo, which will entail a 70-76 per cent reduction. TAMP also raised the discount on vessel and cargo-related charges for coastal vessels by 10 per cent to 60 per cent of the other vessels.

Privatisation of terminals too has been a rewarding experience. Tuticorin, taken over by PSA-SICAL in 1999-00, witnessed a 80 per cent drop in the turnaround time from 2.5 days to 12 hours, within a year.

Although it is about 14 hours now, it is the second lowest among all major ports. Chennai, operated by P&O since December 2001, recorded a 74 per cent fall in turnaround time, again within a year.

Visakhapatnam, which was handed over to Dubai Ports International and United Liners in June 2003, has recorded a 44.7 per cent improvement in the turnaround time, in the last nine months.