Logistics

New law will allow 11 state-owned ports greater financial, regulatory autonomy

Our Bureau Mumbai | Updated on March 12, 2020 Published on March 12, 2020

Government introduces Bill in Lok Sabha to convert major port trusts into authorities

The government on Thursday introduced a Bill in the Lok Sabha that seeks to convert 11 of the 12 ports it runs into authorities from the current trustee set-up. The move, once implemented, will mark the biggest structural reform of state-owned ports ever attempted by any government.

The new law will clear the decks for market pricing of services rendered by the government-owned port authorities as well as public private partnership (PPP) operators at these so-called major ports to help them compete with private ports that are free to set their own rates. Currently, the rates for services provided by the port trusts and the PPP operators are set by the Tariff Authority for Major Ports (TAMP).

Chennai Port Trust, Cochin Port Trust, Jawaharlal Nehru Port Trust (near Mumbai), Deendayal Port Trust (Kandla), Kolkata Port Trust, Mumbai Port Trust, New Mangalore Port Trust, Mormugao Port Trust, Paradip Port Trust, V0 Chidambaranar Port Trust (Thoothukudi) and Visakhapatnam Port Trust will be brought under the Major Port Authorities Act once it is passed. Currently, these 11 ports function as trusts under a law framed more than five decades ago, called the Major Port Trusts Act, 1963.

Kamarajar Port Ltd is the only exception in this regard. Kamarajar, which runs the port at Ennore near Chennai, was formed as a company under the Companies Act, 1956, when it was opened in 2001.

Adjudicatory board

The new Bill, when signed into law, seeks to grant greater autonomy and flexibility to the major ports, to professionalise their governance for speedier decision-making, and to help them compete with private ports.

An adjudicatory board (without tariff setting powers) will be set up under the new law to oversee the functions carried out by TAMP arising from the tariff guidelines of 2005, 2008, 2013, 2018 and 2019 and tariffs orders issued by that Authority. The board will be tasked with receiving and adjudicating on any dispute or differences or claims relating to rights and obligations of major port authorities and PPP operators or captive users for dedicated berth within the framework of their concession agreements, and to pass orders after considering and hearing all the parties involved in the dispute.

The board will appraise and review stressed PPP projects referred by the Centre or the Port Authority Board and suggest measures to revive such projects. It will look into complaints received from port users against the services and terms of service rendered by the major ports or the private operators operating in the major ports and pass orders after hearing the parties concerned.

The new law will help the ports raise loans/additional capital from Indian and foreign lenders. Besides, the ports will be empowered to make their own master plans for areas within their port limit to the exclusion of any State or local regulations.

Board composition

The adjudicatory board shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908.

The board of each port authority will have 11-13 members, of which as many as four will be independent members, two will represent port workers’ unions and one will be a Central government nominee. Among the others will be the chairman and deputy chairman of the port concerned and one nominee each representing the State government where the port is located, and the ministries of Railways, Defence and Revenue.

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Published on March 12, 2020
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