The government on Wednesday approved a revised model concession pact for projects based on public private partnership (PPP) design at major ports to make the investment climate more investor friendly.
The revised Model Concession Agreement (MCA) includes providing an exit route to developers by way of divesting their equity up to 100% after completion of two years from the Commercial Operation Date (COD), similar to the MCA provisions of the highways sector.
“The Union Cabinet chaired by Prime Minister Narendra Modi has approved amendments in the Model Concession Agreement to make the port projects more investor-friendly and make investment climate in the port sector more attractive,” the Ministry of Shipping said in a statement.
The amendments in the MCA envisage constitution of the Society for Affordable Redressal of Disputes - Ports (SAROD- PORTS) as a disputes resolution mechanism similar to the provision available in the highways sector. The government said under provision of additional land to the concessionaire, land rent had been reduced from 200% to 120% of the applicable scale of rates for the proposed additional land.
“Concessionaire would pay royalty on “per MT of cargo/TEU handled” basis, which would be indexed to the variations in the WPI annually,” the statement said.
This would replace the present procedure of charging royalty which is equal to the percentage of gross revenue, quoted during bidding, calculated on the basis of upfront normative tariff ceiling prescribed by Tariff Authority for Major Ports (TAMP).
Operator grievances
The government said this would help to resolve the long-pending grievances of public private participation (PPP) operators that revenue share was payable on ceiling tariff and price discounts are ignored.
The problems associated with fixing storage charges by TAMP and collection of revenue share on storage charges, which had plagued many projects, would also get eliminated.
