NEW DELHI: The shipping ministry has identified 20 port terminal projects worth Rs 150 billion lying idle because of policy issues, following Union minister Nitin Gadkari’s drive to clear private projects just as he did in the case of road projects.
The identified projects are stuck because the concession agreement does not allow commodity transfer, officials said. A terminal that was built for loading and unloading of imported coal cannot be used for steel or automobile loading, for example. Many of these projects are also stuck because of bad design of model concession agreement (MCA) that included insufficient storage area for terminal, high storage charges for private players and an unviable revenue share clause with the government.
About 150 mt of capacity at 12 major ports is lying idle because of this. The private companies whose projects are stuck at government-owned major ports include JRE Infra, RAS Infra and Vedanta.
“There were terminals which were built for imported coal or iron ore. Shipping of these commodities is at all-time low. So, these port terminals are lying idle. They can’t move to other commodities because the pact doesn’t allow it,” a shipping ministry official said, requesting not to be identified. “Projects were structured in a way that they could never succeed,” he said.
The shipping ministry is now preparing a cabinet note to seek a change in the policy to allow transfer of commodities for private terminals in their agreements and for changing other unviable clauses in the contract, the official said. The decision will make investments in ports much more viable for the private sector, which will have the flexibility of switching between commodities, he added.
Road Transport and Highways, and Shipping Minister Gadkari, who was able to push 21 policy decisions regarding road projects through the Union cabinet, is already in discussions with finance ministry to push for changes in shipping policy as well, officials said.
