Bangalore: India plans to establish a new regulatory body for the shipping industry that will also have the powers of a civil court. The said body will be set up under a separate, independent Act to oversee the country’s 12 state-run ports, a top official said.
Regulating ports: A file photo of Chennai port. The regulator will have powers to call for information, investigate, and inspect the books of account or other documents of any port authority or private operator. Hemant Mishra / Mint
The proposed body will be set up under new legislation called Major Ports Regulatory Authority Act, 2009.
“We want to make the new major ports regulatory authority more comprehensive and powerful,” said Rakesh Srivastava, joint secretary looking after ports in the Union shipping ministry.
The move has been welcomed by private investors, who say it will help investments in the ports sector. “It will help promote private investments, both domestic and foreign, and make India’s ports more efficient because the body will have powers to settle disputes and set performance standards for port authorities and private operators,” said an executive at PSA International Pte Ltd, the world’s second biggest container port operator owned by the Singapore government. He did not want to be named because of company policy on speaking to the media.
PSA, which operates container terminals at state-owned Tuticorin and Chennai ports, has often taken the existing port regulator—Tariff Authority for Major Ports, or TAMP—to court after it cut rates at its facility in Tuticorin.
“As the new regulatory body will also act as a grievance redressal forum, terminal operators know they have an authority to settle disputes and help look into their problems. This will also help us save so much on legal costs,” the executive added.
The new authority will also have powers to regulate rates for the facilities and services provided at the 12 major ports and to monitor the performance standards of port authorities and private operators. It will also decide specific disputes between port authorities, private operators and groups of persons using the facilities and services.
However, orders of the new port regulatory body can still be challenged in the high courts. “This provision has not been removed from the proposed legislation.” Srivastava said.
TAMP has powers only to set prices for 11 of the 12 ports owned by the Central government. The lone exception is the Ennore port in Tamil Nadu which, was set up under the Companies Act, 1956 and hence is outside the purview of TAMP.
“The new rule will most likely bring Ennore also under the regulatory body because it will be applicable to all Central government-owned ports,” Srivastava said.
The new regulatory body will have far greater powers than TAMP and will remove the criticism that the existing arrangement is a toothless body with no powers to enforce its own decisions.
“The proposed body will be a full-fledged port regulatory authority, as a regulator should be, instead of being just a tariff setting body like TAMP,” said Neeta Ramnath, vice president, infrastructure advisory division at Feedback Ventures Pvt. Ltd. “Compared to the TAMP regime, the new regime will be much more stable.”
To overcome capacity constraints, the Union government plans to raise the cargo handling capacity at the 12 major ports to 1,016 million tonnes (mt) a year by 2012 from 529mt now.
The additional 487mt capacity will require an investment of close to Rs55,401 crore out of which Rs36, 868 crore will come from the private sector, according to the shipping ministry.
The new regulatory authority will have powers to call for information, investigate,and inspect the books of account or other documents of any port authority or private operator.
“The most redeeming feature of the proposed legislation is the provision relating to monitoring the actual performance of port authorities and private operators along with corrective/penal measures to be applied in case of non-adherence of performance norms and standards,” said S.R.L. Narasimhan, secretary, Western India Shippers Association, a body representing exporters and importers in India’s western region.
The new regulator will have the power to punish offenders with fines of up to Rs1 crore. In case of a continuing contravention of the laws, it can levy an additional fine up to Rs1 lakh a day for the period of the violation.