BackState-owned port trusts get greater financial powers
Government grants greater financial powers to 12 port trusts it controls to expedite decision-making, help them function as commercial entities on par with state-owned firms
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Bengaluru: The shipping ministry has granted greater financial powers to the 12 port trusts it controls to expedite decision-making and help them function as commercial entities on par with state-owned firms.
Currently, 12 of the 13 ports controlled by the Union government are run as trusts under a law framed about four decades ago called the Major Port Trusts Act,1963. Kamarajar Port located in Tamil Nadu is the only exception. Kamarajar was formed as a company under the Companies Act, 1956, when it was opened in 2001.
For capital expenditure, the board of trustees of the 12 ports will now have powers to sign off on investments up to ₹ 200 crore while the chairmen, deputy chairmen and heads of departments have varying levels of financial powers to sanction costs within this ceiling.
The plan to delegate greater financial powers to port trust boards was approved by shipping minister Nitin Gadkari last week, said a spokesman for the shipping ministry.
Mint has reviewed a copy of the circular issued to port trusts on their new financial powers.
“This will simplify decision-making and hasten work funded with port resources," a chairman of one of the 12 port trusts said, speaking on condition of anonymity.
This is the second decision taken by the shipping ministry in less than a month to help the 12 ports compete effectively with private ports. On 27 January, the ministry granted flexibility to the port trusts to set rates based on market forces.
While granting the rate setting flexibility, the ministry said that it would hold port chairmen responsible for “loss of traffic".
The 12 ports held a position of monopoly till the late 1990s; since then the share of cargo handled by the 12 ports has tumbled to 58% mainly after federal states started building ports with private funds without any regulatory and operational restrictions. In 1997, the port trusts were given powers to clear funds for new projects up to ₹ 50 crore and replacement projects up to ₹ 100 crore. Anything beyond that level had to be approved by the ministry resulting in delays in decision-making.
“The real eye-opener is that the ministry has now distributed powers even up to the level of heads of departments and deputy heads of departments. This will give them the confidence to take decisions, gain experience and become good decision-makers," said the port chairman cited earlier.
Apart from improving the functioning of the 12 port trusts, port officials reckon that this could be the first step towards converting the trusts into corporate entities. “Delegation of powers should foster faster decision-making and result in effective implementation of projects and avoid time and cost overruns," the ministry spokesman said.
“This is a very good step," said M.L. Bellani, secretary of the All India Port and Dock Workers Federation, the largest of the four workers unions at the ports.
“We have been seeking autonomy in decision-making for several years. The enhanced financial powers will give flexibility to port trust boards to take decisions faster."
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