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Indian Shipping Minister Comments On Ongoing Projects

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

18 April 2008


India's Ministry of Shipping, Road Transport & Highways on Thursday made several announcements regarding the government's ongoing drive to develop the country's shipping sector, and to increase investment in the infrastructure necessary to achieve this.

Minister for Shipping, Road Transport and Highways, T.R. Baalu first revealed, in a written parliamentary response, that ‘Guidelines for upfront tariff setting for Public Private Partnership (PPP) projects at Major Port Trusts, 2008’ have been released by the government.

According to Baalu, the Tariff Authority for Major Ports (TAMP) will fix tariff caps for handling various commodities or providing various services by private operators licensed by Major Ports under the provisions of the Major Port Trusts Act.

Once tariff caps are set for handling different commodities or providing various services for a port, they will apply to all terminals that are bid out subsequently in the same port during the next five years for handling identical commodity or for providing similar services.

He concluded: "For fixing up upfront tariff, TAMP shall follow normative cost based approach and tariff caps are indexed to the variation in wholesale price index in the manner provided in the guidelines."

Meanwhile, delivering an overall picture of the progress being made under the Eleventh Five Year Plan, which covers the period from 2007-2012, the Minister went on to reveal that the capacity of Major Ports is planned to be enhanced to 1,016 million tonnes per annum (MTPA) to cater to a projected traffic of 708 MTPA.

He stated, again in a written response in Parliament, that:

"Major Ports have identified projects covering the entire gamut of activities, namely, deepening of channels/berths, construction and reconstruction of berths/jetties, floating jetties, rail and road connectivity projects, procurement, upgradation and modernization of equipment and other demanding schemes in order to meet the capacity requirement."

And continued:

"The Government has also put in place a scheme for private sector participation in Major Ports for handling bulk, break bulk and multipurpose and specialized cargo, warehousing and public storage facilities, dry docking and ship repair facilities. To make the project bankable, Government has also issued a new Model Concession Agreement (MCA). It takes into account, amongst other things, investor’s concerns. In addition, all the 12 Major Ports have formulated Port Business Plan, with a 20 years perspective as well as Action Plan for 7 years period with a view to transforming them into ports with world class facilities suited to the requirement of future economy of India."

The Minister finally revealed to the Parliament, or Rajya Sabha, on Wednesday that:

"The Government of India has nominated Mumbai Port Trust and Ennore Port Limited to function as the Nodal Agencies for setting up of shipyards on the West Coast of India and the East Coast of India respectively. The nodal agencies have been authorized to appoint Consultants with clear terms of reference to identify 3 or 4 alternative sites each for setting up of shipyard on West Coast and East Coast of India respectively and also suggest optimal locations with detailed justification."

He went on to reveal that:

"(The) Government of Andhra Pradesh has proposed Vodarevu in Prakasam District as a suitable site for setting up international size shipyard."

And explained that:

"This Ministry of Shipping has subsequently, sought certain further details regarding the location from Government of Andhra Pradesh."

Minister Baalu concluded:

"The Nodal Agencies have been entrusted with the responsibility/job of engaging consultants for preparing, inter alia, detailed project reports, documents for request for proposals/qualifications etc. for setting up two international size shipyards."

"As such, no definite time frame can be set at this stage for finalization of the project and commencement of civil works."


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