Bangalore: The shipping ministry plans to tweak a policy on private port operators and turn it into a law to prevent monopolies in and around ports owned by the Union government.
In a draft policy, the ministry has proposed that private firms not be allowed to operate more than two cargo-handling facilities for the same cargo type inside a government-owned port or within a 100km radius of it.
The only difference from the existing policy is the added caveat of a 100km radius. But the ministry has decided to make the change under Section 111 of the Major Port Trusts Act, 1963, to give it legal backing, said Rakesh Srivastava, a joint secretary in the ministry.
This is because private operators have challenged the existing policy in courts saying it is an administrative decision and not law.
Under the modified policy, if a firm operates a facility for a particular cargo at a Union government-owned port and another at a port owned by a state government within a 100km radius, it cannot bid for additional projects for the same cargo in the former.
This is to prevent private sector monopolies at such ports, according to a 25 January note written by Geetu Joshi, a deputy secretary in the shipping ministry.
Private firms are not happy with the proposed change.
“It is going to limit competition,” said Rajeeva Sinha, a director at Mundra Port and Special Economic Zone Ltd, a company that runs India’s biggest private port at Mundra in Gujarat. “Instead of containing monopoly, the 100km radius rule to compute the number of projects run by a single entity will only limit competition.”
Members of the Indian Private Ports and Terminals Association (IPPTA) will meet on 6 February to discuss the draft policy, association president R. Kishore said by phone from Visakhapatnam on Saturday.
IPPTA has 21 members who are either independent port operators or private terminal and berth operators at Union government-owned ports.
The Union government controls a dozen big ports that together handled 530.53 million tonnes (mt) of cargo in the previous fiscal, accounting for about 70% of India’s external trade shipped by sea.
The government plans to double the cargo-handling capacity of the 12 ports to 1,016 mt by 2012. The additional 442 mt capacity would require an investment of around Rs55,401 crore, of which Rs36,868 crore is expected to be met by private firms, according to the shipping ministry.