Model concession agreement governing the private sector investment in port
projects has been amended drastically to make them investor friendly by
providing exit route to developers through disinvestment after completion of
two years of commercial operation of such projects. The Union Cabinet which met
on January three chaired by Prime Minister Narendra Modi has approved the
amendments in an effort to make investment climate in the port sector more
amendments in the Model Concession Agreement envisage constitution of the
Society for Affordable Redressal of Disputes-Ports (SAROD-PORTS) as dispute
resolution mechanism similar to provision available in Highway Sector. The other salient features of the revised MCA include
Providing exit route to developers by way of divesting their
equity up to 100 per cent after completion of 2 years from the Commercial
Operation Date(COD). This is now similar to the MCA provisions of Highway
provision of additional land to the Concessionaire, land rent has been reduced
from 200 per cent to 120 per cent of the applicable scale of rates for the
proposed additional land.
Concessionaire would pay Royalty on "per MT of cargo/TEU
handled" basis which would be indexed to the variations in the WPI
annually. This will replace the present procedure of charging royalty which is
equal to the percentage of Gross revenue, quoted during bidding, calculated on
the basis of upfront normative tariff ceiling prescribed by Tariff Authority
for Major Ports (TAMP).
The changes will help to resolve the long pending grievances
of Public Private Participation (PPP) operators that Revenue share is payable
on ceiling tariff and price discounts are ignored. The problems associated with
fixing storage charges by TAMP and collection of Revenue share on storage
charges which has plagued many projects will also get eliminated.
Concessionaire would be free to deploy higher capacity
equipment/facilities/technology and carry out value engineering for higher
productivity and improved utilization and/or cost saving of Project assets.
Actual Project Cost" would be replaced by "Total
new definition of "Change in Law" will also include imposition of
standards and conditions arising out of TAMP guidelines and orders,
Environmental Law and labor Laws and increase and imposition of new taxes,
duties for compensating the Concessionaire. Since the viability of the project
was affected,concessionaire will now be compensated for the increase and
imposition of new taxes, duties except in respect of imposition/increase of
a direct tax, both by Central & State Government.
Provision for commencement of operations before COD. This
will lead to better utilization of assets provided by the Port in many projects
before the formal completion certificate.
Provision regarding refinancing is aimed at facilitating
availability of low cost long term funds to Concessionaire so as to improve the
financial viability of the projects.
Extending the provision of SAROD-PORTS for redressal of
disputes to the existing Concessionaires also by introducing the Supplementary
Agreement to be signed between the Concessionaire and the Concessioning
Introduction of Complaint Portal for the use of port users. A
Monitoring Arrangement has
been introduced for keeping periodical status report of
amendments have been proposed keeping in view the experience gained in managing
PPP projects in port sector during the last twenty years and to obviate the
problems being faced on account of certain provisions in the existing MCA. The
amendments in the MCA have been finalized after extensive consultation with the