NEW DELHI: The Union Cabinet on Wednesday approved overhauling the structure of public-private partnership (PPP) pacts for major ports, opening a route for developers to completely exit projects two years after they begin commercial operations.
The measures, which include the setting up of a separate dispute resolution body, is expected to make port projects “more investor-friendly and make investment climate in the sector more attractive”.
The amendments are being made to the Model Concession Agreement (MCA) through which such PPPs are executed and the new system will mirror MCAs for similar PPPs in the Highways sector. According to the statement, the amendments approved also envisage the constitution of a Society for Affordable Redressal of Disputes - Ports (SAROD- PORTS) as a dispute resolution mechanism -- also similar to provisions for highways projects.
Existing private partners (concessionaires) will be extended the provision of SAROD-PORTS for redressal of disputes through a supplementary agreement which will be signed by the private player and the government.
Apart from these two measures, the Cabinet also approved reducing rent for additional land allotted to concessionaires from 200 per cent to 120 per cent of the “applicable scale of rates”. Current procedures of charging royalty based on ceiling tariffs and gross revenues quoted upfront during bidding have also been changed.
“This will help to resolve long pending grievances of PPP operators that Revenue share is payable on ceiling tariff and price discounts are ignored,” the government said. The new system, however, will see royalty paid on the amount of cargo handled.
This, according to the government, will also fix problems associated with fixing storage charges by the Tariff Authority for Major Ports and the collection of revenue share on storage charges which has plagued many projects