NEW DELHI: Port operators have asked the Government to migrate their contracts in accordance with the new Major Port Authorities Bill, 2016, which is expected to be passed by Parliament in the next session.
The Major Port Authorities Bill, 2016, was tabled in the Lok Sabha in December 2016 to replace the Major Port Trusts Act, 1963. With the passage of the Bill, Tariff Authority for Major Ports (TAMP) would cease to exist but the regulations passed by TAMP before 2013 would be applicable to the contracts prior to that period.
The Government is not in favour of automatic migration of the contracts, according to sources. It wants operators to ascertain the revenue model as under the new regulations and then make a shift. "They (port operators) want to migrate to the new regime. We are not against their migration but want them to do so at the market determined conditions," a Senior Shipping Ministry official said.
Private port operators and members of the Indian Private Ports & Terminals Association (IPPTA), like Sesa Sterlite Ltd, Essar Ports Ltd, IMC Ltd, and ABG Infralogistics Ltd, had also demanded that they be allowed to operate under the new rules. Cargo handling firms want that not just 2005 contracts but everyone should be allowed to migrate.
The new Major Ports Authority Bill, 2016, was brought in to bring about faster and transparent decision-making, benefiting the stakeholders, and better project execution capability.
"Previous concession agreements were rigid but after 2013, the agreements have been made flexible. Therefore, we want to shift to the flexible framework," Manish Gupta, Head (Port Business) at Vedanta, said recently.
The Bill is aimed at reorienting the governance model in central ports to landlord port model, in line with the global practice.
Under the new Bill, the role of TAMP has been redefined. The Port Authority has now been given powers to fix tariff, which will act as a reference tariff for purposes of bidding for PPP projects.
PPP operators will be free to fix tariff based on market conditions. The Port Authority's board has been delegated the power to fix the scale of rates for other port services and assets, including land.
In the past, IPPTA had urged the Shipping Ministry to permit existing port operators to migrate to the new tariff regime to help improve the financial viability of private terminal operators.