Infrastructure
Major Port's Lease To Be Extended Beyond 30 Years As Centre Plans Policy Rejig
Amit Mishra
May 24, 2023, 04:18 PM | Updated May 25, 2023, 02:30 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
The Centre is working on a policy that will allow contracts for port terminal to be extended beyond their 30-year lease period, a report in The Economic Times (ET) said. However, the extension will be allowed under certain conditions.
Citing a senior official of the Ministry of ports, shipping and waterway, the report said "The policy will govern major ports and allow them to offer a lease extension for existing terminal operators, subject to certain conditions.
India has a total of 12 major ports which are managed by the Shipping Ministry. Under existing framework, there is no provision to extend port operating agreements that were signed in the late 90s and the early 2000s.
For example, D P World’s two terminal contracts in Jawaharlal Nehru port — India’s biggest container port — are completing their tenures sometime in 2028. This has become a concern for port terminal operators who are unsure if they will be able to hold on to their assets for a longer period, the report said.
Representatives from a private port terminal operator were quoted in the ET report as saying, "Since large investment is involved, the private sector wants visibility over a longer period to know whether the amount spent can be recovered".
On their part, existing terminal operators want right of first refusal in bids, along with bid preferences for lease holders.
Landlord Model
The terminal lease extension policy will usher stable regime for private sector and help in implementation of landlord model.
As part of Maritime Agenda-2020, the Ministry of Shipping wants to convert all the major ports into landlord ports to encourage private sector participation.
This model envisages that State government sets up the basic infrastructure for the port while the private concessionaire takes care of the superstructure and operations.
Privatisation of cargo terminals has become necessary as the ‘port authority’ formed for each of the 12 ports under the Major Port Authorities Act will play the role of a landlord — a model widely followed globally, wherein the publicly governed port authority acts as a regulatory body and as landlord, while private firms carry out port operations, mainly cargo handling activities.
The landlord port, in return, gets a share of the revenue from the private entity.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Support Swarajya's 50 Ground Reports Project & Sponsor A Story
Every general election Swarajya does a 50 ground reports project.
Aimed only at serious readers and those who appreciate the nuances of political undercurrents, the project provides a sense of India's electoral landscape. As you know, these reports are produced after considerable investment of travel, time and effort on the ground.
This time too we've kicked off the project in style and have covered over 30 constituencies already. If you're someone who appreciates such work and have enjoyed our coverage please consider sponsoring a ground report for just Rs 2999 to Rs 19,999 - it goes a long way in helping us produce more quality reportage.
You can also back this project by becoming a subscriber for as little as Rs 999 - so do click on this links and choose a plan that suits you and back us.
Click below to contribute.