MUMBAI : With the role of Tariff Authority for Major Ports (TAMP) diluted considerably, the asset monetisation plan for ports could draw strong private party participation as it improves clarity on return on investment.
“It is a move in the right direction. Private parties would have the needed capabilities to enhance efficiency and improve productivity. But with the right pricing environment given to them to do their business, interest (from private players) is bound to go up,” said Shailesh Garg, director-general manager (Ports) at Drewry—a maritime research consultancy.
In May 2021, under the Major Port Authorities Act 2021, the board of the port would have the authority to frame its own price scales in line with market conditions, unlike the old act, which had to be approved by the TAMP.
Alongside, under the National Monetisation Pipeline chalked out for various sectors by the government, the Ministry of Port, Shipping and Waterways has identified 31 projects for private sector participation in order to better capacity utilization of existing assets. These projects are spread over nine major ports of the total 12 major ports the country has.
The total estimated capex towards these projects stands at Rs 14,483 crore between FY22-FY25. Out of the 31 projects, 13 projects with expected capex of Rs 6,924 crore would be tendered in current fiscal, followed by another 10 projects with expected capex of Rs 4,680 crore are envisaged to be tendered out in FY23, said the document.
“In the current market conditions and economic scenario, it would have anyways not been easy for the government to fund capex on their own. There was no other way out but to ask private players to invest,” said a Mumbai-based port consultant on condition of anonymity.
Two projects each at Paradip port, Kandla port, Mumbai port and V.O. Chidambaranar Port along with one project each at JNPT, Mormugao and Vizag among others are part of the list of 13 projects to be tendered in the current fiscal.
Industry experts are of the view that apart from pure port players of both domestic as well as international market, industrial houses could also be interested in the upcoming port capex plans.
“There could be industrial houses that could look to have a base of captive cargo at the port and then use the facility for multi-cargo handling,” said Garg.
Adani Ports, Essar Ports, JSW Infrastructure of the domestic market and APM Terminals and DP World among foreign players are some of the private players active in the port business in the country.
“We expect fierce competition from foreign players for these assets mainly in the container segment. For the bulk projects, participation is mostly likely to be regional as in domestic players,” said Garg.
India has a 7500 km coastline with 12 major ports and more than 200 private ports. The country’s 95 percent trade volume and 65 percent of trade value is undertaken through maritime transport and hence is a crucial sector for development purposes.
Source : Business Standard