Port operators have asked the government to bring their current contracts under the purview of the new Major Port Authorities Bill, 2016, which, when enacted, will replace the law in operation. Parliament is expected to pass the Bill in its next session.
The Major Port Authorities Bill, 2016, was tabled in the Lok Sabha in December last year to replace the Major Port Trusts Act, 1963. With the passage of the Bill, the Tariff Authority for Major Ports (TAMP) will cease to exist, but the regulations passed by the TAMP before 2013 will be applicable to the contracts before that. However, the central government is not in favour of automatically migrating the contracts. It wants port operators to ascertain the revenue model under the new regulations and then make the shift.
“They (port operators) want to migrate to the new regime.
We are not against their migration, but want them to do so at market-determined conditions,” said a senior shipping ministry official.
Private port operators and members of the IPPTA (Indian Private Ports and Terminals Association) such as Sesa Sterlite, Essar Ports, IMC, and ABG Infralogistics want to be allowed to operate under the new rules. Cargo-handling firms want all contracts and not just the ones signed in 2005 should be allowed to migrate.
The new Bill has been brought to ensure quicker and transparent decision making, benefiting stakeholders and creating better project execution capability.
“Previous concession agreements were rigid, but after 2013, the agreements were made flexible. Therefore, we want to shift to the flexible framework,” Manish Gupta, head, port business, Vedanta, told Business Standard. The Bill is aimed at reorienting the governance model in central ports to the landlord port model in line with global practices.
Under the new Bill, the role of the port authority has been redefined. It has been given the powers to set tariffs, which will act as reference tariffs for bidding for public-private partnership (PPP) projects.
PPP operators will be free to set tariffs based on market conditions. The Board of the Port Authority has been delegated the powers to set the scale of rates for other port services and assets, including land.
The IPPTA had urged the shipping ministry to permit port operators to migrate to the new tariff regime to help improve the financial viability of private terminal operators.