For nearly two decades, Parliament saw discussions and debates on corporatisation of major ports. Different forms were proposed, discussed and abandoned. The 2020 Budget referred to corporatising at least one major port and having it listed in the stock exchange.
According to the observations of the Parliamentary Standing Committee, reasons for the delay in getting the law in place are due to the resistance from Port Unions and the challenges in getting the law passed in the Rajya Sabha. Finally, the Major Ports Authorities Act, 2021 was passed, repealing the Major Port Trust Act of 1963.
What the act hopes to do
The new Act intends to decentralise decision-making and infuse professionalism in the governance of major ports to encourage the expansion of port facilities and ease trade and commerce. Quick decision-making benefits all stakeholders involved and improves project execution capacity. The Act realigns the central port governance model to the landlord port model — which is a lean and efficient strategy.
Even though the new law is in place, there is not much action in the exercise of corporatisation of major ports. The Kamarajar Port in Ennore, Tamil Nadu, which is the only corporatised port, was incorporated as a Public Limited Company in 1999.
Coastal States have not been happy. Goa’s objection was that the new law would make Goa’s land laws redundant in the context of areas governed by the Board. Tamil Nadu is of the view that States’ powers would be diluted.
Need of the hour
Though corporatisation and disinvestment are completely different, the political discourse in our country considers them both as the same. Hence, it has become a sensitive political decision even though corporatisation is the need of the hour.
The new law has simplified the composition of the port authority’s Board and mandated the presence of independent members which would strengthen the decision-making process. The States, Ministry of Defence, and Customs are also represented. The Act also envisages a member representing the employees of the major port authority.
An adjudicatory board would carry out the residual function of the erstwhile tariff authority for major ports and also address the disputes between ports and PPP concessionaires. The port authority has also been given the power to fix tariffs as a reference for bidding in PPP projects.
The Board has full power to enter into contracts; planning and development; fixing tariffs; except in the case of national interest, security and emergency. The Board is also entitled to create a specific master plan in respect of any development or infrastructure.
The Board has borrowed the concept of ‘corporate social responsibility’ from the Companies Act, 2013 which it may use for utilising its funds to provide social benefits including development of infrastructure in areas of education, health, housing, accommodation, skill development, training and recreational activities.
Need to See it through
If this law is implemented in letter and spirit and the Board lives up to the objectives of the Act, then the benefits of corporatisation of major ports would be achieved without actual corporatisation. Unfortunately, the lofty ideals in the law have not been translated into action even in the constitution of the Board. As an example, the members of the Board of the Chennai Port Authority are all representatives of the government and vacancies still exist in the context of members representing interests of employees as well as independent members. Similar is the case in Mumbai Port Authority, Cochin Port Authority and Deendayal Port Authority.
It is unfortunate that the mandate under Section 3 of the new Act — which talks about the constitution of the Board with independent members and members representing employees — is yet to be achieved.
The author is an Advocate and Tax Consultant