Another impetus to ports PPP in the offing - 07 Dec 2009 - Indian Express

Source : http://www.indianexpress.com/news/Another-impetus-to-ports-PPP-in-the-offing/550690

To give a fresh impetus to public private partnerships in the moribund ports sector, the shipping ministry is considering a number of changes to the request for qualification (RFQ) document, the basic bidding document. Further, the modifications are intended to prevent private players from resorting to unhealthy or anti-competitive practices in major ports. Government officials said the RFQ would be amended such that it allows port developers to bid for two consecutive berths in the same port. At present, this is not permitted. The officials pointed out that in the past a number of players were disqualified from bidding for the development of a single terminal if they owned a berth that was adjacent to the one being bid out. However, under the current system the players are allowed to bid for alternative berths.

“The clause was inserted so as to prevent monopolisation within the port. But we have found that it really does not promote monopoly as the number of berths a developer could handle would still remain the same even in the case of bidding for alternate berths,” a senior government official told The Indian Express. For instance, if a player is the concessionaire for berth number 5, then it cannot bid for adjacent berths 4 and 6. This will now be changed as the ministry is in the process of refining the document and will consequently seek Cabinet approval for the same.

The other major change being considered is placing a restricting clause in the RFQ to prevent minor ports located in a radius of 150 km from bidding in major port projects. This will prevent players operating minor ports from bidding for berths in nearby major ports and then squatting on berths. The officials said this move was proposed after instances of minor port developers squatting on berths of major ports were reported. The players resorted to such unhealthy practices to restrict work and divert traffic to their own minor ports. “This was reported in the case of Kandla and Vizag. The port was losing on revenue with traffic being diverted to minor ports by the players,” said an official who did not want to be quoted.

This is just the beginning of a number of changes being proposed in the ports sector as the model concession agreement formulated by the ministry of shipping has come under the scanner. The MCA for ports was approved by the Cabinet in January 2008. The Planning Commission has also made several observations regarding the MCA. Private players did not participate in large numbers in projects bid out in the recent past. The officials said only about 4-5 players participated in bids last year. Moreover, the ministry managed to award only five of the nine bids carried over from last year. Only two from the current year’s 17 have reached the final stages.