With reports of scams and corruption making headlines, the Union government has got too cautious about drafting the captive port policy. In a final Cabinet note it has prepared, the shipping ministry has suggested a bidding process for captive berths, notwithstanding the private sector’s opposition to it.
“It is safe to go through the bidding process,” said a senior shipping ministry official. “By giving berths on nomination basis, we do not want to enter a situation where we are questioned for awarding a project to a particular party.”
Under the proposed policy, the port will invite expressions of interest and the berth will be awarded after a bidding process. According to industry players, the process of inviting EoI ends up defeating the very objective and spirit of captive jetties.
For instance, Essar Ports says that the process has the potential to derail the port-based industry itself. “For, competitors from the same business can use the captive facility as a tool to scuttle the plans of the original applicant’s port-based industry,” notes Rajiv Agarwal, its managing director. “Competitors can submit ridiculous quotes and take the project, only to not implement it. This can ensure entry barrier to an original applicant who would be genuine.”
The eligibility criteria in the captive policy qualifies port-based industrial companies that are dependent on port facilities for getting their raw material or export of its products.
The policy states that if more parties are interested in the facility, the port shall invite EoIs, indicating that a minimum guaranteed throughput which should be at least half the capacity of the project within two years of commercial operation. It also allows the captive user to handle only the specified cargo in the captive port facility, unless one has the prior permission of the port to handle other cargo.
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The policy was primarily mooted in 1996 as part of a notification for allowing private participation in the port sector.
Twelve years later, in the absence of clear guidelines and definition, the government decided to put in place a separate policy for captive berths. Three years have passed since; and a final policy has only been in the realm of discussion.