Power cos,miners may get to set up captive berths

Power and mining companies may now be allowed to set up captive berths at major ports. This has been a long-standing demand of large companies...

Written by Gunjan Pradhan Sinha | New Delhi | Published: February 19, 2010 1:34:54 am

Power and mining companies may now be allowed to set up captive berths at major ports. This has been a long-standing demand of large companies in the sector including MMTC,NTPC and other private players. The captive policy being prepared by the shipping ministry envisages allowing private players to operate port facilities or water front at the port to transport cargo to or from their own manufacturing or processing units. The new policy in the works envisages letting private players set up captive berths on a case-to-case basis depending on the needs of their business. This is just to ensure companies do not squat and also to prevent monopoly at the port premises.

“A number of power plant developers,both national and international,have approached us from the east coast for creation of captive coal berths at ports such as Paradip and Vizag to facilitate movement of raw materials,” a government official said. The move will also benefit private companies such as Posco that has huge operations in Orissa.

According to the draft guidelines,in case there are not too many competitors vying for creating captive berths at a single port and applications are received from a single unit,then the revenue share of the port may be calculated at over 50 per cent of the wharfage and handling charges.

Alternatively,ports may ask for 15 per cent of the return on investment (ROI) by the private player on the captive facilities including berth and equipment handling installed in the port. The rate may be negotiated between the port trust and the entrepreneur with the revenue share being vetted by the Tariff Authority for Major Ports (TAMP) thereafter.

To prevent companies from squatting and blocking port land,the guidelines say that if the captive facility constructed by the player is not fully utilised,the port shall reserve the right to assign the facility to other users. It will also have the right to collect wharfage,port dues,pilotage,etc. The port can then share this revenue with the private player who has invested to create the facility. If the berth is constructed by the port,the berthing charges will be added to the port’s revenue.

So far,India has not put in place a clear captive policy for allowing major industries engaged in sectors such as mining and power. This not only denies the port valuable revenue from a stable player,but also restricts backward and forward linkages for industries dependent on raw material being shipped to them. A committee chaired by the additional secretary and financial advisor (AS&FA) to the shipping ministry has also advocated that the government allow players to have captive facilities at major ports. This will help add traffic volume,revenue and brace competition from minor ports being developed by state governments in the vicinity.

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