Bangalore: The trust that runs Jawaharlal Nehru (JN) port, India’s busiest container port located near Mumbai, will be the first among the 11 owned by the Union government to be converted into a company, a government official said.
“We will corporatize JN port this year,” said a shipping ministry official who declined to be named. “One more port will be corporatized this year, but the candidate is yet to be identified.”
All 11 ports currently function as trusts under a law framed about four decades ago called the Major Port Trusts Act, 1963. Ennore Port Ltd located in Tamil Nadu is the only exception in this regard.
Ennore Port was formed as a company at the start under the Companies Act 1956, when it was opened in 2001. The 12 ports together account for some 72% of India’s external trade shipped by sea. In the year ended 31 March, these ports loaded 560.97 million tonnes of cargo, 5.74% more than the previous year.
The plan to corporatize ports was taken at a recent meeting chaired by Prime Minister Manmohan Singh, starting with JN port, according to the official cited above.
Being a relatively young port, started in 1989, JN port will be easier to turn into a company, unlike the the 10 other ports which have legacy issues, ministry officials said.
For over a decade since 1998, the Union government has sought to convert the 11 ports into corporate entities.
A Bill to facilitate this by amending the Major Port Trusts Act fell through because lawmakers were divided on the issue.
The plan also failed because some 65,000 employees and their unions were opposed to the move. Besides, the government realized that it would be impossible to convert ports such as those located in Kolkata and Mumbai because of land issues.
The official outlined the government’s strategy to execute the plan this time around.
“We will withdraw these ports from the applicability of the Major Port Trusts Act and enforce the provisions of the Companies Act on them,” the official said. “We will consult the law ministry and do everything according to the due process of law.”
The unions said their opposition to the plan will continue. “We are against corporatization; it is not necessary,” said M.L. Bellani, secretary of the All India Port and Dock Workers Federation, the union having the maximum members on its rolls.
The Major Port Trusts Act gives enough autonomy to the ports. “But due to unwanted interference from the government, these ports cannot function independently,” he said.
“Corporatization would make ports much more efficient, more economically oriented and financially oriented,” the Port of Rotterdam Authority said in a report on the business plans of these ports. “The purpose is to distance the enterprise from direct government control.”
“The port of Ennore is the only corporatized Union government port, and it is with some envy that the other ports look at this situation. Ennore has more freedom (for example, it does not fall under the regulations of the port tariff regulator),” it said.
Turning the trusts into companies will allow the ports to become more independent with greater powers to take decisions faster.
The change will also make them more commercially oriented. They will also be able to recast their balance sheets and access banks or commercial funding for expansion projects, the Port of Rotterdam Authority said.