Chennai, 30 June 2021:
Tamil Nadu Chief Minister MK Stalin recently wrote to nine chief ministers proposing that all the coastal states and Union territories oppose the new draft Indian Ports Bill, 2021. Stalin wrote to his counterparts in Gujarat, Goa, Maharashtra, Karnataka, Kerala, Andhra Pradesh, Odisha, West Bengal and the Union Territory of Puducherry seeking their support in opposition to the bill.
Stalin said that the bill will have adverse implications on the management of the minor ports and also reduce the state government’s autonomy in the port’s regulation and management.
The Tamil Nadu chief minister argued that under the current system ports have seen good development. “Further to this, many powers currently exercised by state governments would be taken over by the Union government. Therefore, I propose that all the coastal states and Union territories should express their objection to this new draft Indian Ports Bill 2021 and take joint action to prevent any move to dilute the powers already vested with the states,” Stalin said in his letter.
The Major Port Authorities Bill, 2020 was introduced in Lok Sabha by the Minister of State for Shipping, Mansukh Mandaviya, on March 12, 2020. The Bill seeks to provide for regulation, operation and planning of major ports in India and provide greater autonomy to these ports. It seeks to replace the Major Port Trusts Act, 1963.
The Bill will apply to the major ports of Chennai, Cochin, Jawaharlal Nehru Port, Kandla, Kolkata, Mumbai, New Mangalore, Mormugao, Paradip, V.O. Chidambaranar, and Vishakhapatnam.
Under the 1963 Act, all major ports are managed by the respective Board of Port Trusts that have members appointed by the central government. The Bill provides for the creation of a Board of Major Port Authority for each major port. These Boards will replace the existing Port Trusts.
The Board will comprise a Chairperson and a deputy Chairperson, both of whom will be appointed by the central government on the recommendation of a selection committee.
Further, it will include one member each from (i) the respective state governments, (ii) the Railways Ministry, (iii) the Defence Ministry, and (iv) the Customs Department. The Board will also include two to four independent members, and two members representing the interests of the employees of the Major Port Authority.
The Bill allows the Board to use its property, assets and funds as deemed fit for the development of the major port. The Board can also make rules on: (i) declaring availability of port assets for port related activities and services, (ii) developing infrastructure facilities such as setting up new ports, jetties, and (iii) providing exemption or remission from payment of any charges on any goods or vessels.
Currently, the Tariff Authority for Major Ports, established under the 1963 Act, fixes the scale of rates for assets and services available at ports. Under the Bill, the Board or committees appointed by the Board will determine these rates. They may determine rates for: (i) services that will be performed at ports, (ii) the access to and usage of the port assets, and (iii) different classes of goods and vessels, among others. Such fixing of rates will not be with retrospective effect and must be consistent with the provisions of the Competition Act, 2002, or any other laws in force, subject to certain conditions.
Under the 1963 Act, the Board has to seek prior sanction of the central government to raise any loan. Under the Bill, to meet its capital and working expenditure requirements, the Board may raise loans from any: (i) scheduled bank or financial institution within India, or (ii) any financial institution outside India that is compliant with all the laws. However, for loans above 50% of its capital reserves, the Board will require prior sanction of the central government.
The Bill provides that the Board may use its funds for providing social benefits. This includes development of infrastructure in areas such as education, health, housing, and skill development. These benefits could be provided for the Board’s employees, customers, business partners, local communities, environment and the society at large.
The Bill defines PPP projects as projects taken up through a concession contract by the Board. For such projects, the Board may fix the tariff for the initial bidding purposes. The appointed concessionaire will be free to fix the actual tariffs based on market conditions, and other conditions as may be notified. The revenue share in such projects will be on the basis of the specific concession agreement.
The Bill provides for the constitution of an Adjudicatory Board by the central government. This Board will replace the existing Tariff Authority for Major Ports constituted under the 1963 Act. It will consist of a Presiding Officer and two members, as appointed by the central government. Functions of the Adjudicatory Board will include: (i) certain functions being carried out by the Tariff Authority for Major Ports, (ii) adjudicating on disputes or claims related to rights and obligations of major ports and PPP concessionaires, and (iii) reviewing stressed PPP projects.
The TN chief minister is of the opinion that the present system has led to the good development of minor ports, under the states. This move of the Central Government to bring a new Bill will have long-term adverse implications on the management of minor ports, since the state governments will not have any major role anymore if the Bill is passed.