Financial institutions, private investors to hold 50% in company for port acquisitions.
Indian Ports Global, the proposed special purpose vehicle for foreign port acquisitions, is likely to be set up as a private company. Major ports could hold up to 50 per cent equity in the company and financial institutions and other investors the rest.
Though the structure is yet to be finalised, the shipping ministry wants 50 per cent equity to be non-government. The government could also consider private companies as partners later. “There should be synergy between the interest of the new company and private port operators, some of whom have already made investments in port facilities in Australia, Indonesia and some African countries,” K Mohandas, secretary, shipping ministry, told Business Standard.
According to Indian Ports Association (IPA), major ports will contribute to the equity of the company from their own reserves, though Kolkata Port Trust and Kochi Port Trust, which are in the red, would not be able to do so.
Indian Ports Global will eye both national and international opportunities. “It can help us make strategic investment in countries we get raw materials from. The company can, thus, help us in completing the logistics chain,” said Janardhana Rao, managing director, Indian Ports Association.
Among private companies, the Adani Group-owned Mundra Port and Special Economic Zone had earlier this year acquired Abbot Point Port in Australia for A$1.8 billion (Rs 9,000 crore). The government wants to promote the Indian flag in overseas port facilities.
“India has a lot of expertise in this sector and it should leverage this by venturing abroad. It will help in increasing our footprint internationally and raise our standards as well,” said Michael Pinto, former shipping secretary.
The proposed corporate entity would be similar to the model adopted by Port of Singapore Authority (PSA) and Dubai Ports. The petroleum sector already has such an entity in ONGC Videsh Ltd (OVL), a wholly owned subsidiary of government-controlled Oil and Natural Gas Corporation. Since its inception in 1989, OVL has succeeded in acquiring 33 properties in 14 countries.
A similar joint venture structure exists in the form of International Coal Ventures Ltd, which has equity holding from five PSUs: NTPC Ltd, Coal India Ltd, NMDC, Steel Authority of India Ltd and Rashtriya Ispat Nigam Ltd. Unlike OVL, ICVL has not registered any success in acquisitions. It was set up in 2009.
PSA has spread its wings in different parts of the world by an instrument called PSA International. Similarly, Dubai Ports has expanded its presence through consolidated company DP World. Some European ports have done likewise.
The shipping ministry has prepared an initial draft for forming Indian Ports Global. It is also in the process of discussing the concept with IPA, an organisation representing all 12 major ports in the country, besides experts.
