The Centre is preparing a policy that will allow port terminal contracts to be extended beyond their 30-year lease period, a report in The Economic Times (ET) said. However, the extension will be allowed under certain conditions.
Citing a senior shipping ministry official, the report said "The policy will govern major ports and allow them to offer a lease extension for existing terminal operators, subject to certain conditions."
In India, major ports are managed by the Ministry of Ports, Shipping, and Waterways. As things stand, there is no provision to extend port operating agreements that were signed in the late 90s and the early 2000s.
This became a concern for port terminal operators who were unsure if they will be able to hold on to their assets for a longer period, the report said.
Representatives from a private port terminal operator were quoted in the ET report as saying, "As investors in the Indian port sector, companies strongly advocate for a consistent and stable policy regime when it comes to port concessions."
Operators involved in port business have expressed their concerns regarding infrastructural expansion and capacity augmentation if there is limited clarity about the contract extension regime.
Capacity expansion requires substantial financial commitments and the private sector expects visibility to plan for longer periods. It helps them assess if the capital invested makes financial sense or not, an official from a private sector port told ET.
To encourage private sector participation in the port business, the government wants to bring in the provision of a 100 per cent landlord port model for major ports. As a part of this arrangement, the routine port operations are left to private players who then perform these operations.
Source: Business Standard