Only 2 out of 21 PPP port projects take off

Lack of clarity over tariff increases dissuades bidders.

The government has been able to award only two of the 21 targeted public-private partnership (PPP) projects for major ports for the 2010-11 financial year.

The two projects have been awarded at Tuticorin and Ennore Port Trust. The targeted private investment in these projects is approximately Rs 14,000 crore in the current financial year.

According to the policy for PPP projects, foreign companies can bid along with Indian companies for works at the major ports.

Under the National Maritime Development Programme (NMDP), the private sector is expected to invest Rs 34,000 crore, mainly in commercially-viable projects like development and operation of berths and terminals.

The 21 PPP projects to be awarded this year also include the fourth container terminal at Jawaharlal Nehru Port Trust, which is under litigation over the bidding procedure. The cost for the fourth container terminal is estimated at Rs 6,700 crore.

Some of the most significant private sector port projects include the Nhava Sheva International Container Terminal — one of the first private port projects of India — and the International Container Transshipment Terminal, which is going to be operational from August next year.

“In the current system, the bidders are not allowed to phase out the capital expenditure in cases where it takes them several years to reach the full capacity. There is also no clarity over future tariff increases. These things make the proposals unattractive,” said Deloitte Senior Director Vishwas Udgirkar.

The objective of having private investment is to upgrade and modernise the port infrastructure in India which will enable its performance to be benchmarked to global standards.