Even while the XII Plan remains more ambitious with a higher share of private participation in ports sector, a working paper by the Indian Institute of Management, Ahmedabad (IIM-A) suggests areas that need immediate attention by the government.
Titled 'Issues in PPPs in Ports in India', the working paper has been authored by IIM-A faculty member G Raghuram, along with Niraja Shukla and looks into the issues between port authorities and private parties thereby impacting the PPP model in port development in the country.
Highlighting some of the issues "that need to be addressed", the paper talks about how the same have been impacting the efficacy of PPP investment in the sector.
"PPP mode of investment in Indian ports has made a significant headway and is preferred for investments today. The PPP mode was more popular at non major ports controlled by the state government, than major ports controlled by central government. During the XI Plan, the overall investment in the port sector was significantly lower than planned. It has had an impact on the efficacy of PPP investment in this sector. This paper analyses the issues behind this, to evolve the way forward," the paper states.
The 12 major ports and about 200 minor ports along the 7,500 km coastline of the country have together traded about 935 mt of cargo in 2012-13. The traffic is growing each year. The share of non major ports is rising and has reached 42 per cent in year 2012-13.
According to the paper, the issues which the port authorities or private parties have faced so far should be of interest to stakeholders wanting to leverage the PPP mode of investment. "While there are arguments for and against this mode, the overall outlook for PPPs has been positive in terms of bringing about competition, fairness in operations, efficiency and quality of service. While in general, in all infrastructure sectors, India has been pushing the PPP framework, the happenings of the XI Plan in the port sector bring out various issues that need to be addressed," the paper adds.
Among these issues are model concession agreement, aggressive as well as low or no bidding, legal wrangling, competition as well as tariff policy, among others. The paper highlighted the fact that within non major ports, the XI Plan experiences of states revealed that barring Gujarat and Odisha, the other seven states viz: Andhra Pradesh, Goa, Karnataka, Kerala, Maharashtra, Pondicherry and Tamil Nadu could create much lesser capacities than was envisaged in the plan.
However, suggesting measures to tackle these issues, the paper called for clearer responsibility distinction between public authority and private party.
"Public Authority should retain control and responsibility for land acquisition, clearances, ownership and coordination, connectivity, provision of basic port infrastructure, regional planning including appropriate 'urban' support, policy formulation, tendering and bidding, and force uncontrollable consequences. With many projects implemented and in the pipeline, especially in the container domain, a holistic planning would be required, even between Centre and State, to prevent proposal of unviable projects," it stated.
The paper also called for a regulator with appropriate regulation towards environment, safety and security, tariffs and service level, and dispute resolution which should be considered, apart from including conditions precedent for a project such as clearances, land acquisition and risk analysis and mitigation measures.
"The move towards PPP as a solution for improved infrastructure, competitive environment and higher service level to customer was early in India. It has evolved significantly. However, there are issues which have developed during implementation of these projects and need a greater deliberation between the stakeholders. It is also an opportunity for the Indian PPP experience to be taken to countries wanting to leverage PPPs in the port sector," the paper further stated.
