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April 12, 2024

New Policy may allow ports to extend lease beyond 30 years

New Policy may allow ports to extend lease beyond 30 years

“The policy will govern major ports and allow them to offer a lease extension for existing terminal operators, subject to certain conditions,” a senior shipping ministry official told ET. The country’s major ports are governed by the ministry of ports, shipping and waterways.

At present, there are no rules that allow an extension of these agreements which were signed in the late 90s and early 2000s. This has become a sore point for port terminal operators who want some assurance that they will be able to hold on to their assets for a longer period.

“As investors in the Indian port sector, companies strongly advocate for a consistent and stable policy regime when it comes to port concessions,” said representatives from a private port terminal operator whose lease is set to expire in a decade.

Port players say that further investments in capacity augmentation can be stalled if there is no clarity in the contract extension regime. “Since large investment is involved, the private sector wants visibility over a longer period to know whether the amount spent can be recovered,” officials from another private sector port player said.

“Existing terminal operators want right of first refusal, along with bid preference,” a shipping ministry official said, noting that concerns about errant players that may rig the bids to push out serious port operators also need to be addressed.

“The policy is going to be finalised soon,” the official cited earlier said. The Centre has been pushing the 100% landlord port model for major ports to encourage private sector participation. Under this, the day-to-day port operations executed through terminals are leased out to private players.

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