Major ports may get full freedom to raise money

JNPT, Kandla ports to be the first of 12 major ports to be corporatised.

In what could be a first major step towards giving financial and functional autonomy to major ports, the Centre is mulling corporatisation of Jawaharlal Nehru Port Trust (JNPT) and Kandla ports.

The ports, after corporatisation, would be free to borrow from the market and write off losses.

A final decision has not been taken as the Centre is still seeking views of all 12 major port trusts. However, sources say the shipping ministry wants to tread cautiously and may take up only these two ports to start with.

Ennore port, the country's only corporatised port, had got the status two years ago.

As the port is engaged in around 70 arbitration cases, there was scepticism in the shipping ministry over giving the status to other ports.

However, as most of these cases related to Chennai Port Trust, the nodal agency for Ennore port, these would have no direct bearing on the latter's functioning.

Moreover, ministry officials said the model had run for only two years and it would not be fair to discard it so early.

The ministry had last year set up a three-member committee to study the running of Ennore port, which is managed by a board of directors and is governed by the Companies Act.

The committee's report, submitted to the ministry recently, was sent to all port trusts for views.

Ministry sources say corporatisation will provide ports greater financial autonomy and enable them to raise loans from the market, set tariffs without consulting the Tariff Authority for Major Ports (TAMP) and run overdrafts.

Sources said once corporatised, the ports would not be free to take their decisions. Apart from this, they would have the freedom to restructure their boards. A port trust usually has 15 to 20 members, with representatives from the respective state governments, Railways, and the Customs department. Ennore port's board has four to five members. The Centre holds 100 per cent equity.

The issue of corporatisation of ports was first raised during the NDA government's regime.

That time, there was a debate whether corporatisation should be done through amendments to the Ports Trust Act or the Companies Act. The previous Lok Sabha had referred the Bill, passed by the Rajya Sabha, to a standing committee.

Though the committee favoured keeping ports under Ports Trust Act, the corporatisation project got shelved. In 2005, the UPA government revived the project and set up an inter-ministerial group to look into the issue.