Major ports held back on land-lease policy

For the past nine months, the major ports of India are facing a policy hurdle. They have been unable to give out land on lease in the absence of an approved policy. The result is that several projects there are failing to start.

Until now, major ports followed a land policy framed by the shipping ministry under the Major Ports Trust Act, 1963, since the legislation permitted lease of land on a long-term basis. The policy went through changes from time to time. In March 2011, to put a check on the use of natural resources like land, water, spectrum, etc, the government instructed the shipping ministry to get its land policy approved by the cabinet.

The ministry is finalising a draft for cabinet approval. Among other things, it is likely to recommend regularisation of lease amounts and periods by bringing this under the jurisdiction of the Tariff Authority for Major Ports. “As the container traffic is growing, several people want to set up container freight stations. But, without a long-term lease, such projects are being called off. The minimum lease period required for setting up of such stations is 30 years and in the current scenariom we can only lease for up to 11 months,” said Sriram Ravi Chander, chief operating officer of the Visakhapatnam Port Trust’s container terminal.

In Vizag itself, there are several projects, including the container freight agreement of Balmer Lawrie and Visakha Container Terminal, among others, that have been held up due to this constraint. “Companies have a greater comfort when it comes to financing PPP (public-private partnership) projects if the lease period is longer,” said Vijay Sharma, senior director, Deloitte.

A similar situation is being faced in other ports. Such as Kochi, where the container trade has increased after launch of the Vallarpadam international container trans-shipment terminal. A senior port official said, “The back-up infrastructure is not able to come at the same pace at which the traffic is growing because of this policy bottleneck. It is reducing the decision-making ability of the chairman and the port trust.”

The largest land bank is owned by the Mumbai Port Trust, with 1,800 acres, and the Jawaharlal Nehru Port Trust (at Navi Mumbai), with 2,500 acres.

The major ports give out land on a long-term lease for the purpose of warehousing, container freight stations, stacking of cargo by traders and stevedores and also for infrastructure purposes. Ports also give out land on short-term leases, for a minimum of around four months, to interim users, for parking of trailers, civic infrastructure, a landing strip for airports, etc.

Several large properties like the Taj Hotel sit on land owned by the Mumbai Port Trust. Hindustan Petroelum’s refinery is located on the Visakhapatnam Port Trust’s land. For most of the major ports, suchas those in Mumbai and Kolkata, whose creation dates back to the British era, the land is used for housing offices of the municipality and customs departments.

“None of the ports have bothered to acquire land in places where they need it most. The land with ports is supposed to be used for logistics and it is being used for so many other purposes, since it has all been inherited from the British,” Chander added.

These problems, however, have worked to the advantage of non-major ports, operated by private companies such as Gangavaram, Mundra. Pipavav, etc. With lack of infrastructure and warehousing facility, ships often prefer to berth at the private ports. “The non-major ports have been better sited in terms of their land acquisitions. Pipavav, for instance, has around 1,400 acres and all of it is for developing logistics,” said a senior analyst.