As a first step 11 ports – Chennai, Cochin, Jawaharlal Nehru port, Kandla, Kolkata, Mumbai, New Mangalore, Mormugao, Paradip, V.O. Chidambaranar and Visakhapatnam – will be brought under a new law called the Major Port Authorities Act 2015.
Currently they function as a trust under the 52-year-old Major Port Trusts (MPT) Act 1963. Kamarajar Port Ltd, the 12th state-owned port, is the exception to this law and was formed as a company when it opened in 2001.
According to Mint, which has seen a draft copy of the new law, once approved by parliament the legislation will give these 11 ports the freedom to set rates based on market forces. Currently rates are set by the Tariff Authority for Major Ports.
The respective new board for each port authority would be allowed to raise loan for capital expenditure and for working capital requirements from any scheduled bank or financial institution within India and any financial institution outside India in compliance with applicable laws of regulations prescribed by the central government.
The 12 ports loaded a combined 581.34mt of cargo in the year to March, clocking a year-on-year growth of 4.5%. But this improvement is against a backdrop of a continuing fall in the share of cargo from around 90% in the early nineties to 57% now.
A number of measures have already been taken by the government to augment capacity and improve the operational efficiency of state-owned ports.
However, according to a spokesman for the shipping ministry, these ports are finding it difficult to operate in a highly competitive environment and respond to market challenges owing to the restrictive nature of the existing MPT Act.