The Hindu Business Line : Pvt investments at major ports — Shipping Ministry proposes `two terminals-per-operator' cap

THE Shipping Ministry has drafted a policy that seeks to restrict one private operator to develop and run a maximum of two container terminals in a particular major port.

This area has so far remained un-chartered in the existing policy on private sector participation in setting up cargo handling facilities at the Government-owned major ports.

Though, the Jawaharlal Nehru Port Trust (JNPT) had banned P&O Ports (the first private operator) from participating in the bidding process for developing and operating a second container terminal at the port with private investments and the third over-all in the premier container port in the country, there is no uniformity on the policy to be adopted when a port trust bids out more than two container terminals to private operators at major ports.

According to the draft policy that aims to promote `inter-port and intra-port' competition with a `two terminals-per-operator cap', the first private container terminal operator in a particular port will be banned from participating in the tendering process for developing a second container terminal at the same port.

But, if the same port trust decides to develop a third container terminal with private investments, then both the first and the second private operator will be allowed to participate in the bidding process.

And, in case, if either of them wins the bid to develop a third container terminal, then the operator which has two terminals under its bag will not be allowed to bid when the port trust goes for a fourth terminal with private funds. But, the operator with one terminal will be allowed to participate, Shipping Ministry sources told Business Line.

To illustrate this point, let us take the example of the JNPT, which has a container terminal run by the port trust/Government itself and a second terminal operated by P&O Ports at Nhava Sheva.

In the recently concluded bidding process for developing a third container terminal and the second with private investments at the port, P&O Ports was not allowed to participate.

A consortium comprising the Danish firm Maersk and the state-owned railway company Concor has emerged the highest bidder for developing the new container terminal at the port. If and when the Government awards the new project to the Maersk-Concor consortium, the JNPT will have three different container terminal operators - one run by the Government and the other two by different private operators.

When the JNPT floats tenders for developing a fourth container terminal (the third with private funds) at the port for which the preliminary work has already started, both P&O Ports (the first private operator) and Maersk-Concor team (the second private operator) will be allowed to bid.

At the end of the bidding process, if P&O Ports wins the rights to develop and operate the fourth container terminal, taking the tally of box terminals it has in the JNPT to two, then it will be banned from participating for a fifth container terminal (the fourth with private investments) at the port.

Whereas, the Maersk-Concor team will be allowed to bid for the fifth terminal.

On the contrary, if Maersk-Concor bags the fourth container terminal, it won't be allowed to bid for the fifth terminal, but P&O Ports will be permitted.

The draft policy also favours allowing container shipping lines to bid and develop container terminals at major ports, bringing the curtains down on the debate whether this should be permitted. This was decided by the Ministry after extensively deliberating the suggestions made by a section of the private investors that container lines should be banned from operating terminals at major ports due to the inherent advantages they have in bringing box traffic and also from the point of view of flexibility in fixing tariffs at the terminal by cross-subsidising the ocean freight.