23 Jul Ports and Development – issues and solutions
Ports and Development – issues and solutions – Today Current Affairs
Recent Event: Jawaharlal Nehru Port (JNP) has become the first major 100% landlord port in India, having all berths being operated on the PPP model.
Today Current Affairs
Landlord Port Model:
- Ownership of the port remains with port authority. Infrastructure is leased to private firms that provide and maintain their own superstructure and install own equipment to handle cargo.
- In return, the landlord gets a share of the revenue from the private entity.
Service Port Model : The Hindu Analysis
Port authority owns the land and all available assets – fixed and mobile – and performs all regulatory and port functions. The port trust is both landlord and the cargo terminal operator.
Issues with the ports : The Hindu Analysis
- There is a time delay in leasing out the land to Private operators largely because of the involvement of multiple agencies.
- Presently there is no independent board to look into disputes between stakeholders.
Major Port Authorities Bill 2020 : The Hindu Analysis
Proposed to replace more than the 5-decade old Major Port Trust Act 1963 to enable port authorities to function like a corporate entity by ensuring more autonomy and flexibility to improve governance and reduce the litigations between Public Private Partnership operators and Ports.
- The Bill will apply to the major ports. The central government may notify more major ports.
- Board of Port Authority (BPA): The role of Tariff Authority for Major Ports [TAMP] has been redefined. Now, Board of Port Authority (BPA) has been given powers to fix tariff for the purposes of bidding for PPP projects. The Hindu Analysis
- The Board can use any property, assets and funds under the port for the development of the major port including the leasing of the land.
- Under the 1963 Act, the Board had to seek prior sanction of the central government to raise any loan. Under the Bill, the Board may raise loans (less than 50% of its capital reserves) without the assent of central government. For loans above 50% of its capital reserves, the Board will require prior sanction of the central government.
- Independent Review Board (IRB): It will be setup to look out the residual function of the Tariff Authority for Major Ports (TAMP), disputes between ports and concessionaries, review the stressed PPP projects. At present, there is no independent body to look into these aspects.
The Hindu Analysis
India has been following the service port model which is consistent with centralized economy. However, globally landlord port model is followed which is consistent with market-oriented economy. This resulted in conflict of interest between the port trusts and the private sector, with the former acting both as port regulators and providers of commercial services in many instances. So, there is urgent need for smooth transition to landlord port model to increase their efficiency.