The Hindu Business Line : Paradip berth projects to go to appraisal panel

The approval will enable Paradip port to invite request for proposal or the financial bid from the eight consortia that it has shortlisted for the projects.

Mamuni Das

New Delhi, Sept. 9 Paradip port’s project to set up deep draught iron ore and coal berth on a public private partnership (PPP) basis will be submitted to the public private partnership appraisal committee (PPPAC) for approval in a few days.

The deep draught iron ore berth will be built with an estimated cost of Rs 504 crore and deep draught coal berth is estimated to cost Rs 388 crore.

The Shipping Ministry will move the proposal to the inter-Ministerial PPPAC so that price bids can be invited from players, said sources in the know.

This inter-Ministerial committee approval will enable Paradip port to invite request for proposal (RFP) or the financial bid from the eight consortia that it has shortlisted for the projects.

These projects could become the first port projects to be implemented on the new model concession agreement (MCA), which was finalised earlier this year.

According to the bidding process as specified in the new MCA, the tariffs (ceilings) would be fixed upfront and competitive bids (on a revenue share basis) will then be invited from companies wanting to develop and operate port terminals.

Earlier, port tariffs were finalised by the Tariff Authority for Major Ports (TAMP) after awarding the terminal development work to a company.

This method was changed because the earlier methodology (which assured 15 per cent returns on capital employed) had become a contentious issue, with terminal operators saying that the norms did not reward those operators who brought in efficiency.

Some terminal operators (such as PSA-Sical, DPW) had started approaching the courts following TAMP’s attempts to reduce port charges during the port operations phase.

The TAMP has already decided on the tariffs and the required performance standards that have to be maintained by the build-operate-transfer (BOT) operator, for both the proposed new berths of Paradip port.

These details would form a part of the request for proposal to be issued by the port authorities.