The Hindu Business Line : Draft maritime policy

The draft maritime policy seeks to review the practice of representation of user interests on the boards of major port trusts and to address monopoly situations in areas of port connectivity.

THE Government proposes to discourage the setting up of captive break- or dry-bulk cargo berths at major ports by private investors, domestic or foreign, in a bid to prevent control by a few players.

"As captive berths of break- or dry-bulk cargo for large users could lead to concentration of control in very limited private foreign or private domestic companies, this possibility will be discouraged," says the new Maritime policy drafted by the Shipping Ministry.

On the contrary, there would be differentiation between captive and common user terminals, for development of both types of cargo depending upon the needs, as is followed in the US, the European Union, Japan and China, it says.

As per the draft policy, competitive bidding process will be followed for awarding port projects. However, assets may be leased out on nomination basis, particularly for captive facilities wherein the revenue sharing method will be preferred over royalty payment.

With regard to the Minimum Guaranteed Throughput (MGT), the major port concerned will have the freedom to decide whether to lay down an MGT or not. "However, penalty for failure to achieve the MGT may be made flexible," it stated.

The Ministry also propose to declare select ports as Special Economic Zones (SEZ), in consultation with the Commerce Ministry. The land requirement for SEZ in ports will be suitably modified. The Deputy Chairmen of such ports will be declared the Development Commissioners for the notified SEZ. Private capital will be allowed to develop the infrastructure for the setting up of the SEZ within the port. These provisions are likely to be incorporated in the SEZ Act.

The draft policy seeks to review the practice of representation of user interests on the boards of major port trusts. Since ports are essentially service providers, the present arrangement for representation of user interests as trustees in major ports would be reviewed to enhance the level of their participation.

"Further, it would also be ensured that those who represent such concerned interests as trustees at the port trusts are elected representatives of such constituents and are not discretionary nominees," it said.

To avoid unhealthy competition, the policy aims to develop synergies between major and non-major ports. Towards this end and to protect the territories of major ports, no new minor port may be carved out of the territory of the former.

Similarly, no minor port or a part thereof will be converted into a major port without the consent of the respective State government. The Ministry also plans to finalise the criteria for the declaration of minor ports as major ports.

If necessary, some of the major ports could also be de-notified to enable the respective maritime states to coordinate the functioning of available port infrastructure along the coastline of the state.

Besides, with a view to optimise the use of presently available handling equipments at different ports, inter-port transfer of assets including to minor ports would be permitted at book value. This move has been cleared by the Maritime States Development Council (MSDC).

The draft policy also seeks to address monopoly situations in areas of port connectivity as is enjoyed by Concor or any private tolled road to enable competition as well as improvement in quality and efficiency of such linkages.

Moreover, to ensure that benefits of competition are available to users of ports/terminal facilities, safeguards would be put in place to prevent terminals operated by private parties through special purpose vehicles from becoming captive facilities.