Norms Set For Port Projects In Joint Sector

The surface transport ministry yesterday said that selection of foreign partners for joint venture projects for development of port facilities will be done on a negotiated basis.

Announcing guidelines for joint ventures in the ports sector here, Union surface transport minister M Thambi Durai said the negotiated route would also be adopted for certain government to government arrangements, if certain technology, expertise and managerial practices are to be imported from a specific country.

Several private players have already evinced interest in port projects, especially in developing the Calcutta Port Trusts facilities, through the joint venture route. These include corporates and ports like the Kulpi Port, Bengal Ports, Mukund Iron, and Kaventer Agro.

These joint ventures were intended to attract new technologies and expedite implementation of development schemes. The major ports, the Indian partners) will also be allowed to enter into bilateral arrangements with foreign governments for this purpose, he said.

In addition , major ports will also be permitted to enter into strategic alliances or joint ventures with minor ports in the states for creation of optimal port infrastructure.

The ministry has already been empowered to give environment clearances to such projects he said. Besides, procedures for appointment of consultants is also being simplified.

Joint ventures with foreign port/ private companies would be valid for a maximum of 30 years and at the end of this period, the assets would have to revert to the port trust. However, joint ventures between major and minor ports would be allowed in perpetuity, Thambi Durai said.

In addition, port trusts have also been permitted to have joint ventures with Oil public sector undertakings (PSUs) without any competitive bidding for creating port facilities for handling oil traffic.

However, in such joint ventures the major port trust will always hold a majority stake or a stake sufficient to block any special resolution , he said. The minimum equity stake prescribed under the Companies Act for blocking such special resolutions is 26 per cent. This would mean that foreign companies could still be allowed to invest up to 74 per cent as is permitted under the automatic approval scheme. But, he added that private port operators will not be given financial guarantees and all risks on account of currency fluctuations will have to be borne by the investors, he added.

In all such cases, implementation of projects will be through promotion of special purpose companies, which could be floated as 100 per cent domestic subsidiaries by foreign port companies, he said.

In joint ventures with corporate entities, the selection will be through the competitive bidding route and one of the selection criteria that would be used will be the net present value method.

So far one foreign company and one foreign port are already implementing projects in the country. P&O of Australia is implementing a 6 million tonne container terminal in the Jawaharlal Nehru Port Trust in Nhava Seva, Mumbai.

The Singapore Port Authority is also implementing a container terminal in Tuticorin. In both these ventures the foreign entities have full equity holders in the project.

The minister said that 100 per cent equity would also be considered in specific projects.

So far, investments worth about Rs 1000 crore have already been committed by foreign investors in the port sector in the 11 major ports of the country, he said.

For the current plan period the addition to port capacity envisaged is about 122 million tonnes for which Rs 16,000 crore would be required. Of this 8,000 crore is targeted to come from private sector investments alone .