The Hindu Business Line : Govt fixes performance standards for ports

The new agreement has indicated performance standards in terms
of dwell time, transit dwell time, turnaround time.
Tariffs to be fixed upfront, competitive bids (on revenue share) to be invited from private firms

Mamuni Das

New Delhi, Jan. 4 Private port developers would now have to adhere to specific performance standards fixed by the port authorities failing which they would penalised by at least one per cent of total revenue.

Adherence to the performance standards would be evaluated by the port authorities on a quarterly basis.

In case there is a shortfall by over 10 per cent of the average performance expected, the private firm operating the port would have to pay one per cent of the total revenue for that quarter to port authorities as penalty.

Model pact

The new model concession agreement (MCA), approved by Union Cabinet on Thursday, has indicated performance standards in terms of dwell time, transit dwell time, turnaround time and vessels or volumes of commodities to be handled by a terminal in a certain period. The agreement, which would form a part of the request for proposal (financial bid document), has been finalised after about three years of discussion. All new terminals under the Centre’s jurisdiction would be bid out for operations on the basis of these rules.

The performance standards have been defined for different commodity groups such as container vessels, mechanised iron ore handling, coking coal, thermal coal, imported coke, break bulk and liquid bulk. For instance, for container vessels, the terminals should have the facilities to ensure 25 vessel moves per hour for mainline vessels and 17 vessel moves per hour for feeder vessels.

The new concession agreement has also built in responsibilities for both the port authorities and private companies, failing which the concerned defaulting party will be penalised.

Relevant clearances

Port authorities would now have to get the relevant in-principle clearances such as environmental clearance while handing over the project site to private companies or within a certain time period.

In case of delay, the port authorities would have to pay certain penalties and extend the period of concession. Similarly, the concessionaire is required to submit proof of financial closure of the project at a stipulated time.

In case of a delay on the private developers’ part, the developer would be penalised and the concession period would also be reduced.

Under the new MCA, port tariffs would be fixed upfront and subsequently competitive bids (on a revenue share basis) would be invited from companies wanting to operate the terminals.

Previous regime

In the earlier concession regime, bids were invited from port operators on a revenue share basis without fixing the tariffs.

The Tariff Authority for Major Ports used to fix tariffs periodically by allowing for 15 per cent return on capital employed.

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