How PPP model turned Indian ports world-class

It’s been 25 years since the public-private-partnership (PPP) model was introduced in India’s major ports. In July 1997, the Jawaharlal Nehru Port entered into the first agreement with the private player Nhava-Sheva International Container Terminal within the Jawaharlal Nehru Port in Mumbai.

The Centre and all the major ports are celebrating this landmark. The PPP has enabled managing port operations and new port infrastructure development that was exclusively the functions of the government. The port sector was constrained by limited capacity, traditional infrastructure and poor equipment levels. These were resolved by roping in the private sector to make ports globally competitive.

PPP projects

The PPP investment numbers are mind-boggling in the port sector with nearly 300 PPP projects costing ₹3,47 lakh crore taken up as of December 2019. The Sagarmala Programme has identified 123 PPP projects at an estimated investment of ₹2.63 lakh crore. Of this, 29 PPP projects with investment of ₹44,961 crore have been completed and additional 31 PPP projects worth ₹50,942 crore are currently under implementation. Remaining projects are at various stages of development. The Ministry of Ports, Shipping and Waterways has identified 81 PPP projects costing ₹42,300 crore till 2024-25 for developing major ports’ berths, terminals and oil jetties.

Structures and models

Various structures and models used for facilitating PPP projects include Build-OperateTransfer; Build-Own-Operate-Transfer and Build-Own-Lease-Transfer. The type of model used is determined by the nature of the contract.

The PPP model brought in a paradigm change with port business becoming competitive; more terminals chasing users, said A Balasubramanian, Project Financier and PPP Lawyer with maritime focus.

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The World Bank too praised India’s PPP model, saying the country witnessed considerable growth in PPPs in the last one and a half decade. India has emerged as one of the leading PPP markets in the world, due to several policy and institutional initiatives taken by the central as well as many state governments. PPPs are now seen as the preferred execution mode in many sectors such as highways, ports and airports, it said.

According to Chennai Port Authority’s chairman Sunil Paliwal, the PPP model has been a success not only in the maritime sector, but also in other infrastructure sectors like roads, airports and power.

Learning process

When the PPP started, there was nothing like a Model Concession Agreement. The Centre has been coming up with various templates and through learning along the way, these agreements are being suitably modified to take care of the concerns of the government sector and the private sector. It is a continuous learning process, he said at Maritime Public Private Partnership 2022.

G Raghu Sankar of International Clearing and Shipping Agency said, the PPP model has hastened the economic growth by introducing international level infrastructure in the port - a missing link for decades. If the PPP model had not been implemented, balancing the volume with handling capacity and capability at ports/terminals would have thrown a huge challenge, he said.

Tamil Nadu Finance Secretary, N Muruganandam said, while a lot of positive developments have happened in the PPP model, there is no level playing field between the old and new PPP projects in different regimes. “The new guys will be flying while the old guys will be crying,” he said. This has been there for a long time and needs to be resolved and a decision should be taken to bring all of them under one regime,” he added.

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