Private bidders give port sector a miss

In the past two months, three port projects in Chennai, Tuticorin and Visakhapatnam have not seen a single bid from the private sector

At a time when private investment is being considered crucial for economic growth of the country, private port projects are throwing a spanner. With no bids coming from private sector, the shipping ministry is now planning to invest in a project at the Visakhapatnam port, which has been put out for bid twice in the past  year but has attracted no participation.

Over the past two months, at least three port projects in Visakhapatnam, Chennai and Tuticorin Port Trusts have not seen a single bid from the private sector. The cost of the project WQ 7&8 – a general cargo berth, is estimated to be Rs 300-400 crore.

The government is proposing to build a jetty from port trust funds and later on put up bids to find a private operator. “There is a lot of stress these days on awarding all projects on a public-private partnership basis. But private sector is not showing any interest in port projects over the past year,” a senior shipping ministry official said. The ministry will now seek approval of expenditure finance committee to go ahead with the project. It will also intimate the Planning Commission about converting the project into a public funded one, the official told Business Standard.

Similar instances have occurred recently in Chennai port as well which has not got any bids for a Ro-Ro terminal and a container freight station it wanted to build in Sri Perumbadur.

For the 12th Plan period (2012-17), the shipping ministry has set a target of generating private investment of Rs 1,71,548 crore. It had managed to achieve only 40 per cent of the total investment targets during the 11th Plan period at Rs 35,536 crore.  

According to experts, economic slowdown has led to a fall in business and trade activity at ports, which has discouraged the private sector from making huge investments. Besides, the availability of credit has also become an issue for port companies, facing troubled times.

Within the shipping ministry there is a view that ever since it announced its intention to transform the Tariff Authority of Major Ports (TAMP) from a regulatory body into an appellate body, the private sector wants to invest only after a decision on this matter is taken. The tariff in centre-controlled major ports is regulated by the TAMP, unlike the non-major ports or the state ports which operate in a free market scenario.