Govt likely to stay with flexible PPP contracts on inland waterways

Nascent sector requires ability to be flexible with contracts, according to officials

The central government, which is looking for ways to make inland waterways attractive for private parties, is unlikely to have a standard contract or a model concession agreement for inland waterway terminals, according to a senior official.

 

The government will continue to be flexible with its approach, amid little interest shown by private operators to become cargo handlers on India’s river ports.

 

“When a sector is nascent, freezing standards into a concession agreement puts constraints on the authority’s ability to be flexible and adapt based on the concessionaire’s requirements and a mutually beneficial market arrangement,” the official said.

 

In October, one of Europe’s large river transportation companies – Germany-based Rhenus Group – committed an investment of $100 million in riverine barges to operate on national waterways 1 and 2.

 

The company’s chief executive officer Tobias Bartz had told Business Standard that they would also look to invest in terminals on a public-private partnership (PPP) basis, but needed clarity on regulation from the government.

 

“We need to understand the (regulatory) structure. The goal for us from our experience in Europe is always to have a long-term contract. Such assets need to be managed over decades. Our minimum timeframe is 30 years to operate our ports,” he had said.

 

Queries sent to the Ministry of Ports Shipping and Waterways remained unanswered till the time of going to press. Currently, inland waterway terminal contracts in PPP can be awarded up to 30 years, with possible extensions.

 

In Sahibganj and Varanasi, the government had initially tried to bring a private operator for 50 years – 30 years with a possible extension for 20 years, but could not go through with the projects due to little interest from private players. Both terminals reportedly generated interest from only one player each.

 

Currently, the terminals are managed by the Inland Waterways Authority of India  (IWAI). The Centre is looking for private operators for nearly five of its waterway terminals.

 

The government recently announced the Jalvahak scheme, which subsidises inland water transport by up to 35 per cent as it seeks to make this mode of transport more lucrative. While cargo on India’s rivers has improved, it is broadly based on the captive needs of certain industries, and concerns about navigability continue to keep investors cautious.