Logistics

National Monetisation Pipeline: End of the road for stevedores

P Manoj Mumbai | Updated on August 26, 2021

The NMP has listed 31 cargo berths across nine of the 12 major ports for privatisation by 2025

The national monetisation pipeline (NMP), wherein operational infrastructure assets including port terminals are being privatised through the public-private-partnership (PPP) route, will be the end of the road for stevedores who load and unload cargo to-and-from ships at Centre-run major port trusts.

The NMP has listed 31 cargo berths across nine of the 12 major ports for privatisation by 2025. Stevedores buy licenses from the port authorities after paying an annual fee but are not required to share revenue with the port trusts unlike PPP operators.

These entities are engaged directly by the exporters and importers based on competitive quotations to load and unload cargo from non-mechanised, common user berths run by the port trusts themselves.

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Existential crisis

With the government set to introduce a policy change that allows PPP cargo operators to handle multiple commodities at their facilities – discarding the existing practice of allowing handling of a single commodity – to make the projects attractive, bankable and viable to bidders, stevedores are staring at an existential crisis.

“This is the end of the road for the stevedoring community,” said Ishwar Achanta, President of the Federation of Association of Stevedores (FAS), a lobby group, which represent some 50,000 stevedores at major ports.

The Ministry of Ports, Shipping and Waterways is also evaluating demands from PPP cargo operators to modify their contracts to convert single commodity handling terminals into multi-commodity terminals to achieve full utilisation of assets, increase efficiencies and sustain business.

The demand followed recent government policy changes under ‘Aatmanirbhar Bharat’ mid-way through the 30-year tenure of PPP projects that clipped volumes such as coal and fertilisers and hurt the commercial viability of PPP projects.

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Further, privatisation of State-run cargo berths has become necessary as the ‘port authority’ formed for each of the 11 ports under the Major Port Authorities Act, 2021, will play the role of a landlord – a model widely followed globally wherein the publicly governed port authority acts as a regulatory body and as landlord while private firms carry out port operations, mainly cargo handling activities.

The landlord port, in return, gets a share of the revenue from the private entity. “As all the cargo berths run by the port authorities themselves will be privatised, whatever cargo we are handling will be handled by PPP operators authorised to handle multi cargoes,” says Achanta.

Concession agreement

Even the operational PPP projects are expected to be allowed to handle multiple cargo though the concession agreement was signed for single cargo, he said.

“There will be nothing left for licensed stevedores to handle. There is nothing more we can do except get buried,” Achanta, who runs a stevedoring firm said. Stevedores have approached the government to block demands from private cargo terminal operators handling single commodity to become multi-commodity facilities.

Tenders issued by major ports have specific overriding clauses that state the concessioning authority does not guarantee traffic or volumes and that every bidder must undertake a business study and evaluate the risks involved.

The downturn due to Covid 19 or any policy shift of government cannot be considered as “material adverse effects” or even “conditions precedent”, Achanta said.

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“The sovereign cannot stand guarantee for business and profits of companies, seeking to bid on PPP mode to build and operate cargo terminals,” says Achanta. Stevedores say that they are game for participating in privatisation tenders but the qualification criteria stood in the way as it sets very high financial parameters on net worth, turnover, etc.

“There is no weightage given to experience, particularly when it is the stevedores who have marketed and brought cargo to the port, promoted door to door logistics, bonded facilities for stock and sale, invested in cargo handling equipment and systems and established hinterland connectivity. This is a B2B service business where stevedores work on earnings through calculated performance risks,” he added.

Published on August 26, 2021

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