Govt Moves To Facilitate Revival Of Stuck PPP Projects At Major Ports, To Unlock 27 MTPA Blocked Cargo Handling Capacity

The Ministry of Ports, Shipping and Waterways has finalised the guidelines for dealing with Stressed Public Private Partnership (PPP) Projects at the Major Ports, an official release said on Wednesday (11 May).

The aim of the guidelines is to facilitate revival of the projects falling in the category of stressed projects, the Ministry of Ports said in a release.

According to the ministry, these guidelines have been framed for:-

1. Projects which became stressed during construction stage (Pre-COD stage) i.e. where the work has stopped due to inability of Concessionaire to continue with the execution of the project because of the reasons including aggressive bidding and the optimistic projections with regard to volumes and charges, unforeseen dynamic changes in their business;

2. Projects, both at Pre-COD and Post-COD stage, which became stressed due to borrowings being categorised by the lenders to the projects as NPA and/or lenders have approached NCLT for recovery of their dues, i.e., the PPP projects undertaken by the major ports where the work has stopped due to inability of Concessionaire to continue with the execution of the project on account of borrowings of the Concessionaire having been categorised by lenders as NPA and/or proceedings initiated against it before the NCLT under the Insolvency and Bankruptcy Code 2016 or under Section 241(2) of the Companies Act 2013.

Under the guidelines, the mechanism for resolution of stressed projects is as follows:-

1. In case of the projects which became stressed during construction stage, the concessioning authority would pay to the concessionaire or to the lenders of the concessionaire (as the case may be), as full and final settlement for taking over the useful assets created by the concessionaire, an amount equal to the lower of the following sums:-

a) The value of the work done by the concessionaire in accordance with the Concession Agreement and found useful by the major port (i.e. the Concessioning Authority); or

b) 90 per cent of Debt Due as defined in the Concession Agreement; or

c) Any other amount as may be mutually agreed in writing between the Concessioning Authority and the Concessionaire as per the relevant provisions of Model Concession Agreement (MCA) 2021.

2. For the projects which became stressed both at Pre-COD and Post-COD stage, due to borrowings being categorised by the lenders to the projects as NPA and/or lenders have approached NCLT for recovery of their dues, the due process before the NCLT under the Insolvency and Bankruptcy Code 2016 or under Section 241(2) of the Companies Act 2013 will be followed.

The ministry said that these guidelines will pave the way for resolution of the cases under arbitration. The port asset is likely to be put to use through re-bidding.

"This will definitely result in unlocking the blocked cargo handling capacity of approximately 27 MTPA thereby creating better trade opportunities for the prospective investors and Port Authority will start generating revenue," the ministry said.

It will repose confidence in the investors/concessionaires and also generate employment opportunities, it said.

According to the ministry, some of the long standing disputes on stressed assets at various major ports that may see early resolution are:

1. Development of 13th multipurpose cargo (other than Liquid/ container cargo) berth on BOT Basis at Deendayal Port (1.50 MTPA approx.)