The concept of public-private partnership (PPP) in major port projects is more than a decade old. However, 80 per cent of the projects on this mode were awarded between 1997 and 2004. It was only last year when the Ministry of Shipping awarded 13 more projects to various private enterprises, most of which are in various stages of implementation.
The total private investment envisaged for the Eleventh Five-Year Plan (2007-12) is falling short by 43 per cent with only Rs 10,584 crore invested so far. Under the National Maritime Development Programme, the country’s port sector requires an investment of Rs 55,000 crore. Out of this, Rs 34,000 crore is expected from private sources, mainly in commercially viable projects like development and operation of berths and terminals, among others.
The issue of PPP in major ports will figure prominently during a meeting between the chairpersons of the 12 major ports and Shipping Secretary K Mohandas, slated on Wednesday.
| PRIVATE INVESTMENT IN PORTS | |||
| Status of projects | Number of projects | Project cost (in crore) | Capacity (mtpa) |
| Operational (1997-2004) | 20 | 6,273 | 129 |
| Operational (2007-10) | 5 | 252 | 16 |
| Under implementation | 15 | 10,332 | 127 |
| Under bidding | 25 | 14,772 | 183 |
| Total* | 45 | 25,356 | 326 |
| *(Does not include 1997-2004 data) Source: Ministry of Shipping | |||
The ministry has set a target of awarding 54 port projects till 2011-12, out of which bids for 25 have to be invited this year.
Private participation in the sector has not yet taken off in a big way due to reasons like land acquisition, litigations, clearances to policy issues and even lack of initiative from the port trust itself.
The ministry has awarded one project this year in Ennore Port Ltd for a container berth involving an investment of Rs 1,407 crore jointly to Lanco Infra and British company Erdene.
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Besides, construction work at the two projects in Paradip Port, also awarded this year, have not yet started due to certain environmental issues.
Among the projects to be awarded this year include the fourth container terminal at Jawaharlal Nehru Port Trust, at an estimated cost of Rs 6,700 crore. Apart from this, the bid for a container terminal in the New Mangalore Port Trust which did not attract any private player last year due to ‘very low handling charges’, will be invited again this year.
For the Mumbai Port Trust, one of the oldest ports of the country, the work on the offshore container terminal — its only private project — has started this year and is likely to be completed by 2012.
While there was a delay in awarding projects due to drafting of the model concession agreement (MCA), which was finalised only in 2008, the agreement is again being revised by the Planning Commission.
“In the current system, the bidders are not allowed to phase out the capital expenditure in cases where it takes them several years to reach the full capacity. There is also no clarity over future increases in tariff. These things make the proposal unattractive,” said Vishwas Udgirkar, executive director, Pricewaterhouse Coopers.
Some of the most significant private sector port projects include the Nhava Sheva International Container Terminal, which was one of the first private port projects in the country, and the International Container Transshipment Terminal, which is going to be operational from August this year.
“Private participation has brought a lot of progress to ports in India. Our container ports today are most efficient globally. This could only be achieved due to privatisation,” said Anil Singh, senior vice-president and managing director (subcontinent), DP World.
The objective of having private investment is to upgrade and modernise the port infrastructure in India which will enable to benchmark its performance against global standards.