Why in news? The Union Cabinet has cleared the Major Port Authority Bill, 2020 and it is expected to breathe new life into government-owned major ports. What is the government trying to do?
The Union government‘s Sagarmala project (2015) was aimed at modernising major port infrastructure.
Having invested in port infrastructure, the Cabinet has taken the next critical step to enable ports to control that new infrastructure – operating policy reform.
So, it approved the Major Ports Authority Bill, 2020 to comprehensively overhaul the governance structure of major ports.
This Bill seeks to replace a 1963 Act and it will be sunset time for the Tariff Authority for Major Ports (TAMP).
Why such regulation is needed?
Indian state-owned ports or major ports (12 in number) account for around 55% of maritime cargo traffic in the country.
But, they still have to adhere to a tariff and policy regime that has its roots in the 1960s.
The TAMP is the central authority that sets tariffs for the ports.
It also holds the master key for many other operational and commercial matters. This is just a lot for it to deal.
As a consequence, a substantial chunk of trade has shifted to the ―non-major‖ or ―private‖ ports.
What are the benefits of shifting to private ports?
These ports operate under a much more liberal regime and are under the control of state governments.
They are operationally more efficient and are crucially developed better linkages to the hinterland to enable smooth traffic flows.
Currently, the private sector is involved in major ports in areas like cargo handling.
Much more is needed by way of investment in areas such as dredging and adding new terminals.
[Dredging – Done to increase the depth of the port to accommodate larger ships.]
What is the 2016 version?
The latest Bill approved by the Cabinet is expected to be along the lines similar to the 2016 version of the Bill.
The 2016 Bill granted major ports greater autonomy, including the ability to set tariffs on their own.
It also enabled the board of an individual port to raise funds from banks and financial institutions without taking the permission of the central government.
It provided for the setting up of a centralised adjudication board to resolve disputes in PPP projects between the port and private sector concessionaires.
What is the importance of the Bill?
These measures could lead to major ports becoming more attractive to the private sector, both in terms of investment and as service providers.
These reforms are critical if the investments made in the last few years are to pay off.
The recent measures like the Sagarmala project, developing port-based SEZs, etc., gave a boost to the shipping sector.
With the approval of the Port Authority Bill by the Parliament, a critical missing link will finally be in place.