Consultant to help ports strike pvt-public tie-ups

NEW DELHI: In a bid to attract greater private investment in the port sector, the government has decided to hire a global consultant to prepare the ���model concession agreement��� (MCA) for public-private partnership (PPP) projects in the segment.

The shipping ministry feels that there are several issues related to the privatisation of ports that need to be revisited in the light of the growing emphasis on the infrastructure sector in the country.

The legal consultant will look into the technical, legal and financial aspects involved in the award of PPP projects on a build, operate and transfer (BOT) basis. Apart from studying the existing legislative, policy and regulatory framework, the legal firm is expected to suggest appropriate measures to address the concerns of various stakeholders in the port sector.

It will also prepare a final draft MCA to be entered into between the port trust and private party for all projects awarded on a BOT basis. ���For every project given on a BOT basis, a concession agreement has to be signed with the bidder. The problems faced by investors will be looked into and all aspects will be investigated by the global consultant,��� a shipping ministry official said.

The existing model concession document contains provisions that deal with issues concerning all stakeholders such as the concession period, discount in tariffs given by the BOT operator and revenue share. There are arguments whether the licence period of 30 years, which includes the construction period, is adequate or not.

In the past, ports have received a revenue share as high as 50%, which shows that the revenue share may not be the best method for award of contract and cost to users could be reduced. Among other things, the agreement, which will reflect the proposed policy measures, should identify the financial/commercial risks and ensure their efficient allocation between the contracting parties.

It should also contain provisions regarding the scope of the project to be given on a BOT basis along with its technical, financial, commercial and security terms. Further, all issues that are peculiar to the port sector such as capital dredging, channel maintenance, pricing of services and technological upgradation of facilities will be addressed in the MCA.