Q&A: K Mohandas, Shipping Secretary

'No policy difference with Plan panel'

After crossing the one billion-tonne capacity mark last year, India’s port sector is now being readied to handle over three billion tonnes of cargo by 2020. Shipping secretary K Mohandas tells Ruchika Chitravanshi & Jyoti Mukul that competition is the way forward with port tariffs being left to market forces. Excerpts from the interview:

Port was one of the first sectors to open up to private sector investment. Do you see sustained private sector interest? 
Private sector investment in ports started in the mid-1990s through the public private partnership route. So far, 29 projects in major ports with a capacity of 200 million tonnes have been made functional with a total investment of Rs 8,367 crore. In the 11th plan, 22 projects were awarded during the last two years with a total investment of Rs 7,300 crore for a capacity of 127 mt. In the current year, we have proposed to award 23 projects with a total outlay of Rs 17,000 crore. This will add 232 mt. The biggest of these is the fourth container terminal at JNPT. Out of the 23, formally only one has been awarded, but the rest are at very advanced stages.

 

Ambitious projects like the Chennai mega container terminal are delayed. How do you plan to get over this?
The Chennai Port had on a few occasions cancelled the bids and then called for them again or extended the bid dates. We have to make an assessment. On the one hand, we want to expedite projects. On the other, there is a possibility of getting better bids through rebid process. In Chennai, the investment is huge. It requires the construction of new breakwaters; there is a heavy capital investment of Rs 3,700 crore. It could also emerge as a major transshipment terminal. Draft is becoming increasingly important because ships are getting bigger in size. Half of the container ships ordered globally are over 10,000 TEUs in capacity. Only if we provide deeper draft can our ports receive deeper vessels.

Since projects are coming up in proximity to each other, there is a possibility of them eating into the each other’s business. Shouldn’t there be a non-compete clause in the concession agreement to make projects viable?
In the earlier contracts, there was a provision that a new terminal would not be awarded till the existing one reaches a certain capacity utilisation. As of now, it is not there. We leave it to the market forces. We want infrastructure to be created in a way that berths will be available as the ships come, instead of ships waiting for anchorages.

Are you at loggerheads with the Planning Commission over certain issues in the model concession deals?
There is no major difference of opinion with the Planning Commission over policy and principles. On the legal drafting, there might be differences with the lawyers. These can be reconciled. It is not standing in the way of product implementation. This is unlike in the past, when projects were not awarded due to non-finalisation of documents. We are not holding up anything because of the model concession agreement (MCA). Any revision in the MCA will have only future application. It need not worry investors.

Will the new ports be set up on a corporate model or will they be like port trusts?
They will be corporate ports. These are greenfield projects. So, preference will be given to corporate model that too the landlord port model like we have in Ennore. We have written to all coastal states, seeking suggestion for new major ports. The advantage is the initial investment would come in from the central government. Otherwise, initial work has to be done by the State where expertise is not available.

What is delaying JNPT corporatisation? Is a political green signal in place?
We are still working on it. What is delaying is the resistance from the trade unions. I had one round of meeting with them. Some more communication is required to tell that corporatisation is in the best interest of the port. It is part of the policy decision at the highest level. The Cabinet note is still with us.

With regard to regulation of minor ports, are you putting the proposal of turning TAMP into an appellate body and not a tariff regulatory authority on fast track?
It will require the enactment of the new Indian Ports Bill. We have had consultations with states, but we need to further talk to them. It cannot be put on a fast track because legislative exercise is involved, though we now have a draft bill in place. States had a point of view which was not fully in line with what we were thinking. We had proposed two-tier regulatory authority and do away with tariff authority. Now, state maritime boards currently do regulatory functions as well. So, states see a duplication of efforts. It would be impeding port development efforts by sending out wrong signals to investors.

On tariff front, increasingly ports will cease to be monopolies. There will be competitive facilities available for port users. Once competition is there, it will take care of the tariffs and provide an efficient market. Port users are mostly business and not really individual consumers. So you do not really need the kind of protection you would want to get for individuals.

In shipyard business, companies are trying to grab as many orders as they can from the defence sector, because the civil business is not that good. What is the optimal way of using the existing capacity which are with the PSU shipyards and how can they be enhanced through private tie-ups?
We are happy to see Indian shipyards do defence work. We have nothing to say on defence procurement policy. We have only one shipyard under the shipping ministry which is the Cochin shipyard. The government effort should be to make the best use of the capacities created in this country. As to how defence procurement should take place, we don’t have any views on the matter.

Will creation of a Maritime Finance Corporatisation as proposed in the Maritime Agenda 2020 help in meeting fund requirements of shipping and port sectors?
It is there in the agenda, but it will take time. It would handle both shipping finance and port development. This is not the best time to enter shipping finance. For port development too, there is not much need for concessional finance at the moment.