India Working to Attract More Investors to Its Port Sector

Image Courtesy: JNPT

India has made a step forward in enticing more investors to support the development of its port sector by simplifying its regulatory framework.

Namely, the Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved amendments to the Model Concession Agreement (MCA) which aim to make port projects more investor-friendly and make investment climate in the sector more attractive.

The amended agreement is intended to resolve pending problems in Public Private Participation (PPP) projects in the sector that accumulated over the past 20 years due to certain provisions in the existing MCA.

The amendments have been finalized after extensive consultation with the stakeholders, the government said.

The revisions include providing an exit route to developers by way of divesting their equity up to 100 percent after completion of 2 years from the commercial operation date.

Under the provision of additional land to the concessionaire, land rent has been reduced from 200 pct to 120 pct of the applicable scale of rates for the proposed additional land.

In addition, the concessionaire would pay a royalty on “per MT of cargo/TEU handled” basis which would be indexed to the variations in the WPI annually.

This will replace the present royalty charging scheme which is equal to the percentage of gross revenue, quoted during bidding, and calculated on the basis of upfront normative tariff ceiling prescribed by Tariff Authority for Major Ports (TAMP).

“This will help to resolve the long pending grievances of Public Private Participation (PPP) operators that revenue share is payable on ceiling tariff and price discounts are ignored. The problems associated with fixing storage charges by TAMP and collection of revenue share on storage charges which has plagued many projects will also get eliminated,” the government said in a release.

Provisions aimed at improving the financial viability of the projects by facilitating the availability of low-cost long-term funds, redressal of disputes and introduction of a complaint portal have also been incorporated.

A monitoring arrangement has been introduced as well for keeping a periodical status report of the projects.

Major ports in India recorded a year-over-year growth of 3.46 pct from April to November 2017, Indian Ministry of Shipping said.

As informed, ports handled 439.66 million tons of cargo during the period, compared to 424.96 million tons recorded during the corresponding period a year earlier.

Nine ports including Kolkata, Paradip, Visakhapatnam, Chennai, Cochin, New Mangalore, Mumbai, Jawaharlal Nehru Port Trust (JNPT) and Kandla registered positive growth.

The highest growth was registered by Cochin Port (17.93 pct), followed by Paradip (13.13 pct), Kolkata – including Haldia – (12.64 pct), New Mangalore (7.07 pct) and JNPT (5.69 pct).

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