It is really ironic that PPP projects at major ports face possible
failures when the government is taking all steps to achieve massive results
through port-led developments with greater importance being given to PPP
projects. Reasons are easy to find and the threat of failure of the PPP
projects at major ports is attributed to rigid regulatory framework and the
fluid market dynamics.
Kandla Port Trust scrapped two PPP projects in August with RAS
Infraport Pvt Ltd; the one saying that the other did not pay the contractually
mandated revenue share and the other throwing the blame back pointing out the
port failed to give them rail connectivity and required water depth on time.
At Visakhapatnam, four PPP projects with four different entities are
under stress from rate issues and other tender terms which could finally force
termination in some cases, according to Port Trust Chairman M K Krishna Babu.
According to a managing director of a
Mumbai-listed port logistics firm, every PPP project has legal problems. “Across geographies,
every PPP project is in litigation/arbitration with the government,” he said,
referring to court cases filed by terminal operators individually and
collectively under the banner of the Indian Private Ports and Terminals
Association (IPPTA), over rate setting, lack of dredging on time, delayed
environment and security clearance and insufficient yard space. Projects have
also collapsed due to non-compliance of contractual obligations by the port
One former head of a PPP terminal on India’s eastern coast added one
more angle to the issue saying that though the blame for the crisis must be
shared by the port trusts and the bidders, ‘ the consultants who made the
detailed project report who are mainly responsible’, a view with a strong
common sense. .
For instance, the
consultants had claimed the cargo terminal run by Sterlite Ports at Vizag would
be able to evacuate four lakh tonnes of coal every 10 days. On that basis, they
worked out a capacity of 10.2 million tonnes of cargo a year.
“Did they check if
importers were willing to take the cargo out in 10 days? Did the port give them
adequate rakes? It’s a total design fault, but the consultants go scot free,”
One more point of view
was expressed by another expert who rued that the concession agreements framed
for 30 years did not include provision for review and amendment. Even the
Constitution can be amended, but not concession agreements!” he exclaimed.
give somewhat a total picture of the situation, it is said thirty-three PPP
projects with an investment of Rs.17,818 crore are operational, while 20 more
projects worth Rs.22,363 crore are under implementation.