Orissa port contracts raise many eyebrows

Govt opts for MoU over tender to develop small ports.

Only one of the five contract signed by the Orissa government for development of minor ports was given through tendering. The move has raised several eyebrows, even from within the shipping ministry, questioning the transparency in the procedure of allotment of these projects.

The Orissa government had signed MoUs for Dhamra, Kirtania, Astaranga and Chooramani ports, but for Gopalpur Port Ltd, which is being developed by Cuttack-based Orissa Stevedores Ltd and Sara International.

However, it is not the only one to do so. States like Gujarat, Maharashtra and Andhra Pradesh, too, have adopted similar methods for setting up non-major ports on their coastline.
 

ANCHORING CONTROVERSIES
Port sites	Company
Gopalpur*	Orissa Stevedores Ltd & Sara International
Sites given through MoUs
Kirtania  (Subarnarekha mouth)	Creative Ports
Chudamani	Essel Mining of Aditya Birla group
Dhamra	Tata Steel and L&T
Jatadhari	Posco
Astaranga	Navayuga
Sites being sought by companies
Baliharchandi	Shyam group
Talsari (Bichitrapur)	JSW
Inchudi	IL&FS**

Other greenfield sites
Palur	Bahuda Mohana	Bahabalpur**
Chandipur**	Barunei Muhana
*Only port to be tendered                                   **Stuck due to lack of clearances

“State governments are not following the tender process. It is a scam. You cannot give away national waters to private persons and make them zamindars,” said M L Meena, chairman of Kolkata Port Trust. Kolkata Port Trust, a major port under the administrative control of the Union government, has run into a legal battle with the Dhamra Port, being developed by a joint venture of Larsen & Toubro and Tata Steel, over setting up of a trans-loading facility.

Defending the Orissa government approach, Sitanath Rath, additional secretary in the state's Department of Commerce and Transport, said, “Tendering is a time consuming process. We ask the companies who are interested to give a detailed proposal along with technical study and financial details to show whether they can carry forward the project.”

Former shipping secretary Michael Pinto, too, supports the MoU trend. “New projects in port take a lot of time to be profitable and states look for people who can invest. Tender process can take a lot of time, it is costly and can run into litigation,” he said.

Some of these MoUs come with exclusivity clause. According to some industry officials, the land on the coastline has been given to corporates at throwaway prices. A senior analyst who did not wish to be named too supports the viewpoint. “Public-private partnership in the ports sector is a fuzzy phenomenon. Countries like UK, Spain have systematic procedures in place. State governments want things to happen quickly, but they need to have more rules in place which can bring more accountability.”

Dhamra Port has an exclusivity agreement with the Orissa government that no other port facility will develop within its 25 km. There is ambiguity over whether according to this agreement, Orissa has allotted not just the coast line but also the coastal waters to Dhamra Port. “Major ports all over India do not follow any such exclusivity. Coastal waters are national resources and can be used by non-major and major ports alike,” said a senior shipping ministry official.

Rath refused to comment on the exclusivity agreement.

A senior shipping ministry official, however, questioned the signing of MoUs when projects are facing clearance challenges.

Pinto, too, cautioned that too many ports will create a problem of viability. "It is unwise to have so many ports," he said.

Orissa has identified 14 potential locations on its coastline for the development of ports. Besides the five sites already allotted to private companies, most of the remaining projects are stuck due to clearance issues. For instance Bahabalpur and Chandipur port projects located in the north of Dhamra Port, are facing trouble as they are very close to a missile testing site of the Defence Research and Development Organisation (DRDO).