Indian port bidders may get first refusal rights

Proposal aimed to attract Indian operators.

Indian companies may soon get the right of first refusal while bidding for private terminals in the country's main ports. At present, all privatised container terminals are being operated by foreign-owned companies.

According to the draft private sector guidelines circulated by the shipping ministry to various stakeholders for comments, if the revenue share quoted by an Indian entity is up to 5 per cent below the highest bid, the company will be allowed to match it.

Ministry officials said the move was made in order to encourage Indian operators. The proposal comes at a time when the port sector has started attracting international players like P&O, Maersk, PSA and Dubai Ports International.

The ministry has to finalise the guidelines by August as recommended by the committee on infrastructure headed by Prime Minister Manmohan Singh.

The draft has defined an Indian entity as a company registered in the country in which a majority stake is held by resident Indians.

Companies will also be bound to retain their shareholding pattern for a stipulated period from the date of signing the concession agreement. This specified time can be five or 10 years, depending on the type of concession.

The bidding will be on the basis of a share of gross revenue comprising income from operations including loading, unloading and shifting of cargo.

In case of joint ventures or consortiums winning a project, the draft has also recommended a relaxation in the amount of equity required to be maintained by a constituent member in the special purpose vehicle (SPV), set up for development, management and operation of facilities at ports.

A constituent of the joint venture will have to hold at least 11 per cent stake in the SPV. At present, the constituent has to maintain 51 per cent equity, which can be diluted to 26 per cent after four years.

It has also said that the license period for Build Operate and Transfer projects could be 50 years for projects that required creation of additional assets on BOT basis and investment was high. At present, the concession period is for a maximum 30 years.

A decision to provide for a license period in excess of 30 years would be on case-to-case basis.

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Terminal contract

THE PROPOSAL: If the revenue share quoted by an Indian entity is up to 5 per cent below the highest bid, the company will be allowed to match it

WHO BENEFITS:

Adani Port

United Liners

Essar

Reliance

WHO LOSES OUT:

P&O

Maersk

Dubai Ports Ltd

PSA Sical