Nod to model port pact to reduce disputes

The Union Cabinet today approved the model concession agreement (MCA) for public-private partnership (PPP) projects for major ports in the country.

The new agreement replaces the model licence agreement of March 2000.

The MCA is important for developing ports through the partnership route as it spells out the risk allocation of the project between the private partner and the government.

Under the MCA, port projects would be put up for bids through a new upfront tariff system under which the ceiling of the tariff will be fixed first, after which the bidding will be on a revenue-share basis.

In contrast, under the current tariff system, a licence is granted to the bidder sharing the highest revenue with the port authority.

Usually, the bidders quote higher revenue sharing by escalating the project cost and tariffs, resulting in port projects becoming uncompetitive.

The Cabinet also approved modification to the hydro power policy for providing impetus to the development of hydro-electric projects in the north-east region and other Himalayan states.

The initiative for allocation of such projects will remain with state governments while the scrutiny will be done by the regulator and the Central Electricity Authority.

"This would reduce numerous risks associated with the construction of hydro projects and would help in expeditious development of hydro potential through involvement of the private sector," Parliamentary Affairs Minister Priyaranjan Dasmunsi told reporters after a meeting of the Cabinet here today.

The Cabinet also modified the existing guidelines of the rural-electrification project, named after late prime minister Rajiv Gandhi, to allow use of renewable resources in areas where conventional methods cannot be used for providing power.

It also allowed new projects to speed up for achieving rural infrastructure upgrade targets under the Bharat Nirman programme. The reimbursement rate for providing free electricity connections to BPL households has also been also increased to Rs 2,200 from Rs 1,500 per household.

According to the Bharat Nirman targets, 115,000 villages will be electrified and 23.4 million households will be provided connections by 2009. Other villages will be electrified and all rural households will be provided access to electricity by 2012.

The Cabinet also approved amendments to the routes for the Asian highways network that aims to increase trade and tourism between India, Bhutan, Bangladesh and Nepal.

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OTHER DECISIONS

Continuation of helicopter services in Lakshadweep islands by Pawan Hans Helicopters Ltd

MoU on Indo-Iceland Renewable Energy Cooperation

Amendement to the Payment & Settlement Systems Bill, 2006

Waiver of central loan liability of the erstwhile UT of Goa, Daman & Diu

Reconstitution and extension of the term of the e-committee for the ongoing E-Courts project beyond January 6, 2008

Restructuring of the State Farms Corporation of India Ltd