See fierce competition among private players for port assets, say experts

With the role of Tariff Authority for Major Ports (TAMP) diluted considerably, the asset monetisation plan of ports could see strong private participation as it improves clarity on return on investment.

“It is a move in the right direction. Private parties would have the needed capabilities to enhance efficiency and improve productivity. But with the right pricing environment given to them to do their business, interest (from private players) is bound to go up,” said Shailesh Garg, director-general manager (ports) at Drewry — a maritime research consultancy.

Under the Major Port Authorities Act 2021, the board of a port would have the authority to frame its own price scales in line with market conditions, unlike earlier, when it had to be approved by the TAMP.

Under the National Monetisation Pipeline (NMP), chalked out for various sectors, the ministry of port, shipping and waterways has identified 31 projects for private sector participation in order to improve capacity utilisation of existing assets. These projects are spread over nine major ports of the 12 the country has.

The total estimated capex towards these projects stands at ~14,483 crore between FY22 and FY25. Out of the 31 projects, 13, with expected capex of ~6,924 crore, would be tendered in the current fiscal. This will be followed by another 10 projects, with expected capex of ~4,680 crore, envisaged to be tendered out in FY23, said the document.

“Under the current market conditions and economic scenario, it would not have been easy for the government to fund capex on its own. There was no other way out but to ask private players to invest,” said a Mumbai-based port consultant.

Two projects each at Paradip, Kandla, Mumbai and V.O. Chidambaranar port, along with one project each at JNPT, Mormugao and Vizag, among others, are part of the 13 projects to be tendered in the current fiscal.

Industry experts are of the view that apart from pure port players (both domestic and international), industrial houses could also be interested in the capex plans of upcoming ports.

“There may be industrial houses that could look to have a base of captive cargo at the port and then use the facility for multi-cargo handling,” said Garg.