The Ministry for Ports, Shipping & Waterways has recently introduced new tariff guidelines for the Public-Private Partnership (PPP) projects at Major Ports across India. These guidelines are in line with the Major Port Authority Act, 2021.
Understanding the New Guidelines
Previously, PPP concessionaires at major ports had to operate under the Tariff Authority for Major Ports (TAMP) regulations, while private operators at non-major ports could set tariffs according to market conditions. Now, TAMP has been abolished as per the Major Port Authority Act, 2021, allowing concessionaires at major ports to set tariffs based on market dynamics.
Currently, major port’s PPP concessionaires handle approximately 50% of the total traffic managed by all major ports in India. These new guidelines will level the playing field and make it possible for PPP concessionaires at Major Ports to compete with private ports effectively.
Significance of the New Tariff Guidelines
These guidelines signify a significant reform initiative as the Government moves towards deregulation of tariffs for PPP Projects at Major Ports, marking the start of a new era of market economy. This move intends to increase the competitiveness of Major Ports.
Insights into the Major Port Authority Act, 2021
In February 2021, the Parliament passed the Major Port Authorities Bill, 2020, aiming to provide greater autonomy and flexibility to major ports across the country, professionalizing their governance. The act aims at decentralization, promoting expansion of port infrastructure, faster decision-making process, reorienting the governance model in central ports to landlord port model aligning with the successful global practice.
Understanding Public-Private Partnership (PPP) Projects
PPP projects involve a partnership between a government agency and a private-sector company to finance, build, and operate projects like public transportation networks, parks, and convention centers.
Common PPP models include Build-Operate-Transfer (BOT), Build-Own-Operate (BOO), Build-Operate-Lease-Transfer (BOLT), Design-Build-Operate-Transfer (DBFOT), Lease-Develop-Operate (LDO), Operate-Maintain-Transfer (OMT), and more.
Overview of Major Ports in India
Under the Constitution of India, Major Ports come under the Union list and are administered under the Indian Ports Act 1908 and the Major Port Trust Act, 1963. There are currently 12 major ports and 200 minor ports in the country.
These ports are classified as Major and Minor according to the jurisdiction of the Central and State government as defined under the Indian Ports Act, 1908 with Major Ports being owned and managed by the Central Government and Minor ports by the State Governments.
Administration and PPP Projects in Major Ports
Each major port is managed by a Board of Trustees appointed by the Government of India, operating based on policy directives and orders from the Government of India.
Over the years, India has witnessed an increase in PPPs in the ports sector, especially in the operations and management of ports and construction of deep water ports, container terminals, shipping yards, and bulk ports.