Finance Minister chaired body to decide fate of stalled port projects

As reported, a high profile committee chaired by Finance Minister Arun Jaitley will be looking into the stalled shipping projects worth around Rs 20,000 crore. Over a dozen shipping projects, including the Kandla and Visakhapatnam ports, have been stalled for a considerable time due to numerous reasons, including the projects being abandoned by contractors. Reports indicate that the committee, headed by Jaitley, will comprise the law minister, shipping minister and a Niti Aayog representative to decide on the stalled projects. The revised model concession agreement (MCA) is expected to attract more investments in the shipping sector. It is more investor-friendly and has several new features such as change in revenue model as well as replacing the ‘actual project cost’ with ‘approved project cost’. Also, payment of royalty for the ports will now be on the basis of per million tonne of cargo handled instead of percentage of gross revenue based on tariff determined by the Tariff Authority for Major Ports (TAMP). The agreement also includes an exit clause on par with highway projects that allows developers to hold 51 per cent equity until two years after commercial operation date, after which, they could exit by way of divesting their equity of up to 100 per cent. The Minister has reportedly said that the amendments are keeping in view the experiences in PPP projects in the port sector during the last two decades.