Half of port expansion projects yet to be awarded

With private players deliberating on investing in infrastructure projects in the aftermath of the global slowdown, nearly half of the projects for capacity expansion at ports, scheduled for awarding this year, are likely to spill over into the coming financial year (2010-11).

The Ministry of Shipping has considered awarding 30 projects in 2009-10 at an estimated cost of over Rs 20,000 crore, through public-private partnership (PPP).

These projects are expected to enhance capacity at the centrally-regulated 12 ports by 46 per cent. Of these, only 10 projects worth Rs 2,000 crore have been cleared, which constitutes one-tenth of the investment target.

However, the government hopes to clear six more projects worth Rs 5,000 crore by the end of the March deadline. Even with that, only 35 per cent of the investment target set out by the ministry for clearing PPP projects would have been met.

In terms of numbers, nearly half the projects worth around 13,000 crore are likely to be carried forward for awarding in 2010-11.

Industry sources attribute the slow privatisation of infrastructure development projects in ports to the guidelines for tendering, which make mostly international players eligible for operating terminals in the country.

An official with a consultancy firm said on condition of anonymity: “In the initial quarters of 2009-10, conditions of the global market were not conducive for development of such projects. Private sector players did not evince much interest, but with the economy showing an upward trend, the bidding process can be expected to pick up this year.”

Vishwas Udgirkar, executive director at PricewaterhouseCoopers, adds: “PPP projects for capacity expansion at ports get delayed because of the long decision-making process. Unlike in road development projects, which are regulated by one central agency, in the ports sector, major port trusts forward proposals to the ministry, which are then passed on to the Public Private Partnership Appraisal Committee (PPPAC) for approval.”

He added that the model concession agreement (MCA) framed by the Planning Commission makes no provision for viability gap funding of these projects.

A senior official at the ministry concurs: “The initial two years of the Plan period were spent in finalising MCA. However, there are irregularities in the document for which projects often get held-up.”

Of the seven projects approved by PPPAC recently, two are held up due to litigation issues. They include a Rs 6,700-crore container terminal construction project (the biggest considered for development in the country) and a Rs 600-crore container handling facility development project at Jawaharlal Nehru Port in Mumbai.