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Major ports are badly in need of autonomy

Major ports are badly in need of autonomy
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First Published: Fri, Sep 05 2008. 01 07 AM IST

Updated: Fri, Sep 05 2008. 01 07 AM IST
For eight months, Kandla port, one of the 12 so-called major ports owned by the Union government, has been without a full-time chairman, deputy chairman, chief mechanical engineer, chief engineer, financial adviser-cum -chief accounts officer and central vigilance officer.
The western port, the second biggest among major ports in terms of cargo handled last year, is now looked after by the chairman of Mormugao port who has additional charge of it. The deputy chairman of New Mangalore port has additional charge as deputy chairman of Kandla. The traffic manager of Kandla port has additional charge as the port’s financial adviser and chief accounts officer. And the chief operations manager of the port’s offshore oil terminal at Vadinar is acting as its chief vigilance officer too. A three-member list of candidates for the chairman’s post, recommended by a committee headed by the Union shipping secretary, was rejected by shipping minister T. R. Baalu.
The absence of key full-time officers has affected the functioning of Kandla port. Plans to increase the cargo handling capacity of the port have been delayed.
The phenomenon of empty senior management slots is a malaise that regularly cripples other major ports too .
The latest episode brings into focus the internal working structure of major ports, which account for some 75% of the cargo handled at all the ports in the country. Though they are public sector undertakings, 11 of the 12 major ports function as trusts under the Major Port Trusts Act, 1963. The lone exception is Ennore port that was set up as a company under the Companies Act, 1956.
The appointment of chairman and deputy chairman of major ports has always been the prerogative of the shipping minister. The appointments committee of the cabinet, or ACC, headed by the Prime Minister merely approves the shipping minister’s choice. This is unlike top appointments to other public sector firms which are done by the Public Enterprises Selection Board, and cleared by ACC.
There have been instances in the past when a person assumed office as chairman of a major port (Chennai) only for a day before being transferred because a key ally of the government of the day wanted its own person to head the port.
The existing model also helps ministers pack people belonging to their own party, or their loyalists, as members on the board of port trusts under the category of “other interests”. Each of the 11 port trusts has four members who are appointed as so-called “other interests” out of a total of 17-19 members.
Due to lack of autonomy, both financial and operational, the managers of major ports have to run to Delhi to seek guidance and approval from the ministry (read the minister) on all matters.
The Port of Rotterdam, in a recent report, has looked at this larger picture—the relations with the ministry, the division of responsibilities and tasks between the ministry and the port trust and the necessary level of autonomy to distance these enterprises from direct government control.
Europe’s biggest port was hired by the shipping ministry to advise it on a business plan for the 12 major ports.
Rotterdam port is of the opinion that a clear division of responsibilities and power, taking into account an optimal level of autonomy, will form the foundation for the future of major ports in the country. This includes delegation of powers and responsibilities, autonomy in tariff-setting and investing, faster decision-making process, operational freedom and professionalism.
Rotterdam port has recommended commercialization where most benefits can be achieved. Essentially, commercialization creates an environment in which the port is expected to run on a commercial basis. This involves a variety of business-like decisions that need to be made promptly, without referring them to the controlling authorities first. Commercialization allows the port management to conduct its own affairs and most importantly, makes it accountable for its decisions and performance.
Rotterdam port has not specified in detail the powers and responsibilities that are to be delegated by the ministry to the ports and to what extent.
In this regard, there are several examples globally for the ministry to chose from. For instance, Antwerp port, Europe’s second biggest, is 100% owned by the city of Antwerp. Though some members of the city council are on its board, Antwerp port enjoys a great degree of autonomy in taking operational and investment decisions.
Autonomy along the same lines as that given to navratna and mini-ratna public sector firms here, would help India’s major ports run their operations more efficiently.
For close to a decade, the government has been labouring on converting the port trusts into corporate entities. A Bill to corporatize major ports has been stuck in Parliament because lawmakers are divided over the issue.
Though corporatization is high on the agenda in India, Rotterdam port says it is better to focus on commercialization first.
P. Manoj is Mint’s resident shipping expert and writes on issues related to shipping and logistics every other Friday. Respond to this column at allaboveboard@livemint.com
To read all of P. Manoj’s earlier columns, go to www.livemint.com/allaboveboard
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First Published: Fri, Sep 05 2008. 01 07 AM IST