Private sector participation in the Indian port sector has made significant headway. Public-private partnerships (PPPs) are steadily becoming the preferred mode of investment for the sector. The Ministry of Shipping’s Pravir Krishna spoke at a recent conference organised by India Infrastructure about the current state of PPPs in the sector as well as the investment opportunities going forward. Excerpts…
There is a lot of hope and optimism in the port sector in spite of the problems being faced. At present, there are 89 PPP projects, of which only 14 are stressed. This is not a very high percentage of the total number of projects and that is fairly encouraging. Moreover, of these 14 projects, issues have been resolved for six.
Further, during the India Maritime Summit, 140 proposals for the port sector came from all over the world, involving investments worth Rs 830 billion.
During the next two to three years, projects worth Rs 800 billion have been proposed. In the current fiscal year (2016-17), 68-70 projects with investments worth Rs 250 billion are proposed to be taken up. Apart from this, six new ports are being developed involving another Rs 200 billion. These investments have already been tied up and involve a component of the PPP model or the landlord model wherein the government or the port trust constructs the basic breakwater and berths while the remaining infrastructure is built by private partners.
We are also laying a lot of emphasis on improving efficiency and ease of doing business and reducing procedural delays, in order to bring down time and costs. A number of initiatives have been taken by the government in this direction such as the introduction of a port community system and the Indian Customs and Central Excise Electronic Commerce Electronic Data Interchange.
The draft Central Port Authorities Act, 2016 has already been released by the Ministry of Shipping and is expected to be introduced in the winter session of Parliament. According to the new act, port trusts will be converted into port authorities with full autonomy and decentralised decision-making powers. The act has also delegated the power to fix rates for services and assets to the Board of Port Authority instead of the Tariff Authority for Major Ports, which currently regulates tariffs for major ports.
Further, the Department of Economic Affairs is also coming up with negotiation terms to address the issues that are pending. By the end of 2016, I am hopeful that we will have a robust system for negotiating stressed projects in a transparent manner.
Overall, I think that PPPs have been very successful in the port sector. The initiatives taken by the government are showing impressive results. Last year, the 12 major ports together reported a net profit of Rs 46.65 billion. Going forward, at least 100 million tonnes of capacity can be added with improvements in efficiency at Indian ports. However, issues related to hinterland connectivity need to be addressed. That said, there is plenty of optimism in the sector and PPPs can be considered to be the way forward.