Port development in Andhra lacks transparency: CAG

The Comptroller and Auditor General of India (CAG) has said the selection of bidders for the development of non-major ports in Andhra Pradesh was neither fair nor transparent.

These observations extended even to Kakinada and Gangavaram ports - the two ports for which the private developers were finalised in the late 90s when N Chandrababu Naidu was chief minister. Development of ports in the private sector in AP began in late 1990s.

"There were deficiencies in the competitive bidding process for selection of developers in Gangavaram and Kakinada deep water port, reflecting adversely on fairness and transparency in selection," it said in a report tabled before the state legislative Assembly on Friday.

Similar issues were reported earlier by the CAG's audit report in respect of Machilipatnam and Vanpic ports, which were awarded to private players in 2007-2008 when YS Rajasekhara Reddy was chief minister.

Taking a critical view at the public-private participation (PPP) model adopted in the development of non-major ports in the state, the report observed there were post-bid/post-award changes to the terms and conditions of the project, though none of the concession agreements had provisions for such amendments/revisions. This resulted in undue favour to the private developers and against the financial interests of the state government. "Changes were made to the concession agreement to alter its basic structure, thereby vitiating the sanctity of the bidding and contracting process," it said.

Irrespective of the provisions of the concession agreements, the state government irregularly permitted or allowed change in the shareholding pattern of the development consortium and/or port operator in three ports namely Krishnapatnam, Gangavaram and Machilipatnam.

According to the report, a key aspect of the development of ports in the PPP mode was the allotment of large tracts of land to these ports, also facilitating mortgaging of such lands by the private developers to banks and other lending institutions for obtaining huge loans for project development, leaving little risk or exposure on part of the private parties.

The report also said multiplicity of non-major ports along the coastline, with liberal grant of exclusive rights over large lengths of the coastline well beyond port limits, had virtually rendered the majority of state's coastline privatised. Andhra Pradesh has a 975-km long coastline and 14 notified non-major or minor ports.