Port facilities may be allotted without tenders to captive users

Port facilities may be allotted without tenders to captive users

Bangalore: The Union government may allow industries located near the 13 ports it owns to set up cargo terminals at these facilities for their exclusive use.

The shipping ministry published a draft policy on its website on Wednesday outlining the terms for allotting captive cargo-handling facilities to port-based industries.

“The policy seeks to make operations of major ports more competitive by empowering them to attract large and dedicated cargo," the ministry said in the draft policy.

Entities permitted to run such facilities will have to invest in their construction and maintain and manage them for a maximum of 30 years. They will have to guarantee a minimum amount of cargo a year and pay revenue to the port on the basis of rates set by the Tariff Authority for Major Ports (TAMP), the tariff regulator for Union government-owned ports.

Captive terminals won’t be allotted through a tender process, as commercial cargo handling terminals typically are. Entities that want to set them up will have to apply to the ministry.

The captive facilities normally won’t cater to users other than those for whom they are set up. But if a facility is not fully utilized, the port will have the right to allow other entities to use it and collect charges from them.

Demand for such facilities is expected to grow in coming years, with Union government-controlled ports such as Tuticorin, Cochin, Kandla and Jawaharlal Nehru port planning to set up special economic zones (SEZs).

India, Asia’s third biggest economy, plans to spend 3 trillion on ports in the 10 years ending 2020 to expand capacity for loading 3.2 billion tonnes of cargo from the existing 1.01 billion tonnes, according to the maritime agenda for the decade announced by the shipping ministry on 13 January.

“As the cargo is assured by the captive users, port facilities will be utilized to the fullest extent," said R. Kishore, president of?the Indian Private Ports and Terminals Association (IPPTA), an industry lobby.

The need for such facilities also arose after South Korean steel giant Pohang Iron and Steel Co. Ltd (Posco) decided to set up a captive port at Jatadhari, 7km south of Union government-owned Paradip port, to handle coal and iron ore required for its proposed $12 billion steel plant near Paradip in Jagatsinghpur district of Orissa.

Initially, Posco considered Paradip port to set up the captive facility to import coking coal and export a portion of the iron ore extracted from its captive mines in Orissa.

The steel maker, however, decided to opt for the Jatadhari port nearby in the absence of a proper policy and stiff terms set by Paradip port.

Kishore said that local power utilities are importing large quantities of thermal coal to fuel their plants.

“Those power utilities who don’t have a port of their own to import coal, could utilize the policy to set up captive facilities at any of the Union government-controlled ports," he added.