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With proposed Port Authorities law, major ports may be privatised

P Manoj Mumbai | Updated on February 07, 2021

The new Public Sector Enterprise policy approved by the Cabinet has excluded the 11 major port trusts from its scope (read strategic disinvestment/privatisation), but a new law designed to convert these “port trusts” into “port authorities” may still facilitate this goal.

Once the Major Port Authorities Bill is passed by the Rajya Sabha (it has already got Lok Sabha nod), the government could attempt corporatisation of the 11 ports by invoking Section 50 of the proposed law, feel workers unions.

“Without prejudice to the foregoing provisions of this Chapter, the Board (of each Port Authority) shall in discharge of its functions under this Act, be bound by such directions on question of policy as the Central Government may give in writing from time to time: Provided that the Board shall be given an opportunity to express its views before any direction is given under this sub-section. The decision of the Central Government on whether a question is one of policy or not shall be final and binding on the Board”.

Unless the ports are converted into companies, the government cannot list them on the stock exchanges and potentially disinvest or privatise them.

Reaping dividends

Corporatisation will also help the government receive dividends from these ports. In March 2020, Chennai Port Trust acquired the government’s 67 per cent stake in Kamarajar Port Ltd — the only State-owned port that is run as a company — for ₹2,383 crore, making it a wholly-owned subsidiary.

The transition of ‘port trusts’ into ‘port authorities’ would also facilitate privatisation of cargo handling terminals operated by the State-owned port itself.

This is because the ‘port authority’ formed under the new law will play the role of a landlord – a model widely followed globally — while private firms carry out port operations, mainly cargo handling activities.

Seven operational projects in major ports worth more than ₹2,000 crores will be offered on PPP mode in FY22, Finance Minister Nirmala Sitharaman had said in her Budget speech.

With coastal States preferring the privatisation route to building new ports, privatising ports owned by the Centre could be considered once they are corporatised, said a port industry consultant.

Published on February 07, 2021

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