Restructuring and regulation in the ports sector: Indian experience

S SundarDistinguished Fellow

The Energy and Resources Institute

Dhaka, Bangladesh, September 2003

Structure of Ports in India

Major Ports Placed in union list of Indian

Constitution Governed under the Major Port

Trust Act, 1963 by the Government of India

Administered by a Board of Trustees

...Structure of Ports in India

Minor Ports Placed in concurrent list of Indian

Constitution Administered under the Indian

Ports Act, 1908 by State governments or by State Maritime Boards

Institutional Problems

Lacking in commercial approach Unwieldy management by Trustees

with vested interests Ports viewed as sources of revenue Powers concentrated in the

government

Indian port performance

High pre-berthing delay (3.6 days in 1995- 96)

High vessel turn around time (8.3 days in2003-03)

Low equipment utilization• Low labour productivity

High manning scales

Reasons for poor performance Ports not adjusted to changes in

cargo categories Obsolete and poorly maintained

equipment Over staffing Cumbersome customs procedures Poor port access facilities Absence of inter-port and intra-port

competition

Port reforms toolkit: World bank Set reforms objectives Areas for private sector participation Methods of private sector involvement Legal and institutional restructuring Allocating financial risks Draft ports concession agreements and

tender documents Identify responsibilities for risk allocation,

funding, regulation and implementing port reforms

Introduce labor reforms

Policy initiatives in India -Objectives

Recognition of the need:- to attract new technologies

- to introduce efficiencies and better management practices- to attract PSP- to introduce competition

….Policy initiatives in India

Adoption of landlord port' concept Decision to corporatise ports Setting up of Tariff Authority of Major

Port (TAMP) Major ports enabled to set up joint

ventures Acts amended

...Policy initiatives in India

1996 Guidelines Areas for private sector investment

identified Procedure prescribed for inviting

private participation Criteria for evaluation prescribed Model tender documents and

concession agreements formulated Corporatisation of Ports

Labour

Surplus labour to be identified and redeployed

Labour to be taken over with the facility to be indicated in the tender document

Labour taken over by the franchisee to retain a 5-year lien with the Port Trust

Labour(contd.)

VRS-Introduced in all ports Manning scales re-negotiated Law amended to provide for

amalgamation of dock labour ports

Other initiatives

Master plan for each port Upgradation of equipment through

public- private investment Restructuring port facilities

Other initiatives (contd.)• Streamlining of port-customs interface• Introduction of EDI • Introduction of Commercial Accounting

Practises• Corporatization

Policy initiatives in states

BOOT Model Joint venture for development and

operation of an entire port

Private Sector participation in non-major ports

Already invested (in crores of Rs.)- Andhra Pradesh : 40- Gujarat : 4475- Maharashtra : 70- Tamil Nadu : 129

Total 4714

Expected Investment (in crores of Rs.) - Andhra Pradesh : 3357- Gujarat : 18713- Maharashtra : 1500 - Tamil Nadu : 3227

Total : 26797

Other Results (contd.)

Pre-berthing delay has been reduced to 0.34 days(2002-03)

High vessel turn around time has been reduced to 3.8 days in 2002-03

Labour force has decreased from approximately 105000 (1995) to 74000 (2001)

Thank You