The much awaited port policy announced by the Chief Minister Ashok Chavan brings Maharashtra at par with the other Maritime States. It will also give the much needed impetus to the growth of the Ports as Maharashtra has a number of sites along the 720 kms of coastline, said Vijay Kalantri, President, All India Association of Industries (AIAI), and promoter of Dighi Port.
The state government in June revised its port policy, taking a cue from the development of ports in neighbouring Gujarat, coupled with the poor maintenance of its 48 ports.
The port policy is indeed progressive as designating the MMB as a SPA will give more powers to the MMB to facilitate speedier regulatory clearance associated with the Projects. However, the policy does not clarify the Investment plan from the MMB or the State as an equity participant within a stipulated time frame and alternative mechanisms for the same in the projects as is the case with the other States.
The policy is however silent on the connectivity issues which forms a very critical component of port development. The Policy should have laid more emphasis on this issue as ports require an efficient and stable logistic infrastructure to operate efficiently.
The policy should have also established a logistic framework to complement the development of ports for seamless connectivity to the hinterland. Kalantri further said that the purchase of land and various clearances required have been made simpler, which will enable the developers to develop ports on fast track. Doing away with various duties/Taxes/Royalty on development work and relief in electricity, stamp duty and on excavation will benefit this sector.
Development of port will not only bring in the much needed. Investments but will also generate employment and facilitate rural development and tackle regional imbalance to a large extent.
With the new policy having lots of incentives, the government expects investment of Rs22,775 crore in the next five years. The government also declared that port development would now be given industry status entailing many benefits.
“The port, multi-purpose jetty, cargo terminal projects will enjoy the package scheme of incentives for the first 8 years. The incentives will include relief in royalty on excavation of earth, sand, clay, silt, stones; rebate on electricity, duty, registration, and stamp duty on equipments. The right of way needed for water and power supply will be made available free of cost,” said chief minister Ashok Chawan.
Also, the Maharashtra Maritime Board (MMB) has been given the status of special planning authority apart from the proposed formation of a special purpose vehicle comprising Rail Development Corporation Limited, port developer and MMB. Chawan said that expressions of interest will soon be called to kick-start the development process. “This will help the development of ports in Konkan,” he added.
The port policy has also been entangled in the decisions of the Central Vigilance Commission (CVC), which oversees the financial decisions taken by India's state-owned firms. Restrictions set by CVC on government departments and state-owned firms accepting single bids do not apply to port privatisation contracts, the shipping ministry has said.
A single bid is not a preferred option only in cases where the government is hiring a contractor or purchasing a proprietary item, said Rakesh Srivastava, a joint secretary in the shipping ministry. Port projects being developed by private investors on a build-operate-transfer (BOT) basis are not a proprietary item, he said.
“In the case of BOT port projects, the government is not buying anything nor are we paying anything. So the CVC guidelines on single bids will not be applicable in this case,” Srivastava said, adding that the ministry will soon make a policy announcement on this.
The government will, however, check any port contract auction that has received only a single bid to see if the amount quoted is competitive. Port privatization contracts are typically awarded to bidders willing to share the highest quantum of the annual revenue with the port.
CVC's guidelines on single bids had not affected the shipping industry until recently. On 31 May, Ennore Port Ltd received a single price bid from a list of six pre-qualified bidders for developing a Rs1,407 crore terminal that can load up to 1.5 million standard cargo containers a year at its port in Tamil Nadu. The bid is yet to be opened because of the CVC rule on single bids.
Earlier, Visakhapatnam port, also owned by the Union government, scrapped a tender to select a firm that was to develop and operate mechanized fertilizer cargo-handling facilities at the port, investing Rs250 crore.
ABG-LDA Bulk Handling Pvt. Ltd, a joint venture between ABG Infralogistics Ltd and French shipping firm Louis Dreyfus Armateurs SA, was the lone bidder for the 30-year contract. The port management opened ABG-LDA's revenue share price bid of 15%, but later scrapped the auction without giving a reason.
Visakhapatnam port has since floated a fresh tender for the project. “The shipping ministry cannot have different policies for each of the port it owns (referring to Visakhapatnam port opening the single bid before scrapping the auction,” said a Mumbai-based port analyst, who asked not to be named. “There has to be a uniform policy on single bids for all the 13 Union government ports.”
Ami Mistry, a manager at infrastructure consultancy firm Feedback Ventures Pvt. Ltd, said it would make sense for the government to set a reserve price for such auctions, and reject bids below that level. “There is no other way to find out whether the government is getting the best deal out of it.”
Visakhapatnam port has recently decided to allow barges in cargo lighterage activity on concessional berth hire charges. At present, the general cargo berth (GCB) is the only berth in the port where lightening operations are being carried out to enable Panamax and Handly Max vessels to enter the inner harbour.
As per the existing policy, the vessels at the GCB are to be berthed for lightening purpose in the order of their arrival seniority, thus making vessels wait in queue for a long time due to pre-occupancy of the GCB.
This has led to diversion of traffic to other ports. In this situation, allowing barges for cargo lightening activity would help both the port and trade, a section of the media recently reported.
In addition, the port announced a 50 per cent concession on berth hire charges on barge usage.It costs a vessel Rs 5 lakh to 20 lakh per day of waiting, depending on the vessel size. Till recently, vessels have been waiting for 3-5 days due to pre-occupancy, with cargo owners having to pay huge demurrage charges to vessel owners.
"The decision allowing barges for lightening in mid-sea will help mainly the cargo-owners but also the trade," said Sambasiva Rao, managing director, Sravan Shippings. Given that the Vizag port does not own any barges, private players Eversun Sparkle Maritime Services Private Limited and Bothra Shipping Services have evinced interest in operating barges for cargo-lightening operations. Once the port gives permission, 1,500-5,000 tonne capacity barges will be put into operation.
The Union government plans to raise the cargo handling capacity of the 13 ports it runs to 1,002 million tonnes by 2012 from 599 mt now as economic growth strains existing facilities.