The Hindu Business Line : OECD’s 3 suggestions for Indian ports

Reconsider the role of the Tariff Authority for Major Ports (TAMP), convert the port authorities into corporations, and grant multiple concessions at a single port.

These are the three policy recommendations for improving the port infrastructure, in ‘OECD Economic Surveys: India 2007’ ( www.academicfoundation.com).

TAMP, established in 1997, sets ceilings for freight rates for the major ports on a cost-plus basis. “However, given the increasing number of non-major ports it is not altogether clear that a natural monopoly element exists in the sector,” the report notes, to highlight the need for an independent regulator.

Cautioning that if ceilings on freight rates are set too low, private investment would suffer, the OECD (Organisation for Economic Co-operation and Development) publication makes a case for increasing the competition level among ports to avert excessive pricing power.

Apart from reconsidering the role of the regulator, we can enhance the separation of the Government’s roles by converting port authorities into corporations, argues the study.

“Corporatisation would encourage private sector participation and facilitate unbundling into owners and service providers, which can subsequently be privatised.” Though the issue was first raised in the mid-1990s, “only one of India’s major ports (Ennore) is run by a company,” OECD observes.