Companies can have ‘captive berths' at major ports

Companies which are major port users can now set up their own “captive ports” on the land and water-front owned by major ports.

According to a draft captive (port) policy released by the Shipping Ministry on Wednesday, port-based industrial units (which are large port users) will be allotted land and water front on a nomination basis for setting up dedicated ports for their own use.

This is the first time that the Government has come out with a uniform captive port policy. The policy is aimed at making major ports more competitive by empowering them to attract large and dedicated cargo

The land will be leased out for a maximum period of 30 years. The company bidding for the port should ensure a “minimum guaranteed throughput” which should be at least 50 per cent of the capacity of the project within two years of commercial operations.

If there is only one party, the project will be awarded at a price discovered as the highest of the following: 50 per cent of the wharfage plus handling charges or 15 per cent return on investment (as per TAMP order) or a negotiated rate between the port and the entrepreneur.

If there are more than one interested party, the project will be given to one offering the maximum net present value. The value is calculated by the following method: The minimum guaranteed throughput of each year multiplied with the quoted revenue for the corresponding year and discounted at a rate equal to 10-year government securities plus five per cent. The quoted revenue shall not be less than 50 per cent of wharfage and handling charges according to the schedule of rates, said the draft policy posted on the Ministry's Web site on Wednesday.

The entire cost of the project will have to be borne by the company. The captive user will be allowed to handle only the specified cargo. The major port will have the right to assign the use of the port to others if the capacity is not fully used by the company according to the terms and conditions agreed by the developer of the port.

The proposal for allotment of captive ports will be evaluated by an empowered committee representing the Shipping Secretary and representatives from the Planning Commission, the Department of Economic Affairs and port trusts.