Port projects in troubled waters

The Prime Minister’s decision last week to ensure time-bound implementation of port projects worth Rs 35,000 crore and a capacity addition of 244 million tonnes in this financial year, has met with a one-word response from industry: Unrealistic. It’s not difficult to understand the cynicism.

The last port sector target was to award 42 projects by March 2013. The actual awarded was just three, and it is by no means an exception. While the targets remain on paper, most public private partnership projects have just not taken off due to approvals and security and environment clearances.

Both the shipping ministry and the private parties are bogged down by the complex approval procedures involved in the awarding of projects. There are also hurdles like the land policy without which all land leases have to get cabinet clearance. “Unless processes are simplified, it is very difficult to achieve these targets on time,” said K Mohandas, former shipping secretary. The high target set by the PM, he said, may hopefully pressurise officials to act fast.

AT ANCHOR

• Aug ‘03: Sagarmala project announced by former PM A B Vajpayee, targeting an investment of Rs 1,00,000 crore
• Mar ‘05: Sagarmala renamed National Maritime Development Programme, targeting capacity of 800.41 Mt by 2011-12 and investment of Rs 55,803 crore
• Jan ‘11: Maritime Agenda 2020 targeting capacity of three billion tonnes and investment of Rs 5 lakh crore
• May ‘12: PM announces target for FY 2013 to award 42 projects, capacity addition of 244 Mt and an investment of Rs 35,000 crore

The shipping ministry has been insisting that it should be given more powers for awarding projects. For instance, all projects up to Rs 250 crore have to be approved in three stages; first by the standing finance committee, second by the committee of Economic Affairs and Shipping secretaries and then by the shipping minister and the finance minister. For projects above Rs 300 crore, a cabinet note has to be prepared. Things are not smooth for all projects that fall in between with a PPP appraisal committee looking into the project.

The ministry has also proposed that it be allowed to sanction all projects up to Rs 500 crore. “Government procedures have become much longer now with irresponsible allegations being made all the time which demoralises the administration,” Mohandas added.

According to industry players, apart from the issue of clearances, there are other inadequacies with the public-private-partnership (PPP) model. “The risk allocation in PPP is completely against the private parties with the government not sharing any part of it. Secondly, the competition clauses in the agreement are treated very loosely,” said Hemant B Bhattbhatt, senior director, Deloitte India. He went on to add that building crucial infrastructure like roads and railways has to be the government’s initiative which lacks action.

Shipping minister G K Vasan in his Maritime Agenda 2020 had mentioned addition of four hub ports — two on each coast. The government has been in the process of finalising one more major port in Andhra Pradesh since last year but no decision has been taken yet. Contrarily, the one addition that it had managed to make in the form of Port Blair Port Trust is also expected to be de-notified as a major port soon after workers protested against the move. All states have been asked by the ministry to give possible options for construction of a new major port.

Besides, one of the most ambitious port projects, the Rs 6,700 crore fourth container terminal at the Jawaharlal Nehru Port Trust, which was awarded to consortium led by Port of Singapore Authority (PSA), is still in limbo with the company refusing to pay Rs 50 crore stamp duty.

Some of other PPP projects that the government aims to award this year include, construction of six riverine jetties at Kolkata Port at a cost of Rs 300 crore with 4.5 million tonnes capacity. Besides in Paradip Port Trust, the new coal terminal is still in limbo due to certain clearances which are yet to come. Some of the projects awaiting security clearance include Conversion of berth No 8 as Containers Terminal at V O Chidambaranar (Tuticorin) Port, oil jetty at Haldia in Kolkata Port Trust — which has been in suspended animation since 2010-11.

(This is the second in a series of reports on the challenges before the infrastructure projects identified by Prime Minister Manmohan Singh for fast-track implementation, in a meeting on June 6)