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Government seeks to recast Model Concession Agreement for PPP projects at Major Ports

Barely two years after the cabinet under NDA-1 revised the model concession agreement (MCA) for public-private-partnership (PPP) projects at Major Port Trusts, the Shipping Ministry is back at the drawing board again, seeking to recast the key document that sets out the terms and conditions of a port contract.

But, unlike previous attempts, the third edition of the MCA will be drafted by the Ministry based on ideas / suggestions from the “existing / prospective investors / PPP concessionaires / individuals / stakeholders.”

“Ministry of Shipping intends to revise the existing MCA. This initiative is being taken to align the provisions of MCA with the best practices to attract more PPP investors in the port sector,” a public circular issued by the Ministry said.

Suggestions for new MCA to be submitted by Feb 28

Ideas / suggestions for revising/amending the MCA are to be submitted to the Ministry by February 28, the circular said.

The MCA currently followed was approved by the cabinet in January 2018 -– the previous document was finalised some two decades ago when the Government allowed private funds into the Major Ports sector — to make “port projects more investor-friendly and make the investment climate in the port sector more attractive”.

But, this did not make investment sentiment favourable for PPP projects at Major Port Trusts with hardly any new projects being bid out using the revised document, partly due to overcapacity across cargo segments at Major Ports and partly due to a slowing global and local economy, which depressed demand.

Major Ports’ combined capacity to handle 1,514.09 million tonnes (mt) of cargo a year

India’s 12 Major State-Owned Ports have a combined capacity to handle 1,514.09 million tonnes (mt) of cargo a year.

In the year to March 2019, these ports together loaded 699.10 mt of cargo, translating into capacity utilisation of 46.17 per cent.

Between April and January in FY20, the dozen ports loaded a combined 585.725 mt of cargo, clocking growth of 1.14 per cent over a year ago.

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