CNBC-TV18's Archana Shukla reports that the government's plans to boost port infrastructure has failed to excite operators.
The government wants to boost investment in port infrastructure by allowing port operators to tweak freight handling tariff for new public- private partnerships projects in the 12 government-owned ports. CNBC-TV18's Archana Shukla reports on the impact of these new rules on the ground.
It's a clarion call for more investment in port infrastructure. The government's new guidelines for future port projects will allow port operators to annually increase, upto a set limit, cargo handling rates, on the basis of market forces.
But for existing port-operators who could potentially invest in future projects too, the problem has not been solved. Rates at existing terminals are still decided and capped by the Tariff Authority For Major Ports (TAMP), a structure which puts operators at a disadvantage against private or state-owned ports, where no such restrictions apply.
Henrik Lundgaard Pedersen, CEO - Asia Pacific, APM Terminals says, “Our current investments are in a squeeze. We had to cut our tariffs by 44 percent last year after an order by the regulator. Nothing much changes for us.”
Now port-operators have been lobbying for long to move to a market-driven tariff model in existing projects that includes doing away with TAMP. While changing TAMP's role to monitoring performance under the new guidelines, the government says a complete revamp will take time as it requires changes in the existing law. While critics question the prospective nature of the new policy, the government assures that the next phase of de-regulation will look at a similar tariff model for existing port projects. In the meantime, it is confident future investors will be interested.
Shipping minister GK Vasan says, “This will provide a level-playing field for port operators, will increase competition and bring in investments. We plan to award Rs 58, 000-crore worth of port projects by the end of the 12th Five-Year Plan, by launching projects worth Rs 25,000 crore in this fiscal alone.”
But experts say global port operators like APM Terminals, Dubai Ports World or the PSA of Singapore already operating in India may not be too keen as yet. For one, the global slowdown has forced most of them to cut back on investments and two, many may be too cautious to pump money into an area where they've already burnt their fingers.