Bangalore: Six consortia of private companies in the reckoning for developing and operating a modern deep-sea port at Karwar in Karnataka, with an investment of more than Rs1,000 crore, are stumped by a decision of the state government to regulate tariffs at the port.
This is the first instance of a maritime state deciding to regulate tariffs at a port being developed with private investments. The Karnataka government will set the upper tariff limit for the Karwar port, allowing private operators the flexibility to levy charges within this frame.
“However, for computation of annual gross revenue for purposes of revenue sharing with the state government, the ceiling will be taken into account, ignoring discounts or rebates offered by the private operator,” said an official at the department of ports and inland water transport at the Karnataka government. He did not want to be named.
The shortlisted bidders have now sought freedom to set tariffs on their own. “As the Karwar port would require significant investments, development and marketing efforts, we should be allowed the freedom to fix tariffs,” said an executive at Sical Logistics Ltd, who asked not to be named.
Sical will be bidding for the project in partnership with Subhash Projects and Marketing Ltd.
The other consortia that are pre-qualified to submit financial bids for the project are Mundra Port and Special Economic Zone Ltd, Hindustan Infrastructure Projects and Engineering Pvt. Ltd along with Pembinaan Redzai Sdn Bhd of Malaysia, Apollo Infrastructure Projects Finance Co. Ltd with KEI-RSOS Maritime Ltd and North Canara Seaport Pvt. Ltd, and Maytas Infra Ltd with Nagarjuna Construction Holdings Ltd and Kakinada Sea Ports Ltd.
Noble Group Ltd is also in the fray along with Gammon Infrastructure Projects Ltd, VM Salgaocar and Brothers Pvt. Ltd and MMTC Ltd.
The entity willing to share the highest proportion of annual operating gross revenues from the port project with the state government will get the rights to operate the 30-year contract.
The private firm selected to develop and operate the port would be entitled to levy charges from owners and consignees of cargo using the project facilities and services, as per the scale of rates approved by the state government, the department of ports official mentioned earlier said.
The state governments of Gujarat, Maharashtra, Orissa, Tamil Nadu and Kerala, which are also developing ports through private investment, have granted these private operators the freedom to fix tariffs for the services provided at these ports.
In comparison, tariffs at the 12 major ports owned by the Union government are set by a regulator, the Tariff Authority for Major Ports (TAMP).
Indian ports currently have a capacity to handle 756 million tonnes (mt) of cargo a year. Of this, the 12 major ports can handle 528.75mt a year, while those owned by the states can handle 228mt a year.
The country’s cargo-handling capacity needs to be raised to 1,500mt a year by 2012, to meet the rising demand for exporting and importing goods, according to the shipping ministry.
It estimates that around Rs90,000 crore will be needed to raise India’s cargo-handling capacity at ports to 1,500mt a year. Much of this money is expected to come from the private sector.
The 12 major ports are expected to add some 500mt of capacity a year by 2012, while those owned by the states such as the one in Karwar are expected to add another 610mt a year.