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Indian Private Ports, Terminals Association urges Shipping Minister for provision extension in new Model Concession Agreement

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New Delhi, Feb 16: Indian Private Ports & Terminals Association (IPPTA), the apex body that represents the interests of the private ports and terminals in India has urged Minister of Ports, Shipping and Waterways Shri Sarbananda Sonowal for extension of provisions for existing concessionaires in the New Model Concession Agreement.

IPPTA strives to ensure that private ports and terminals play a major role in developing the country’s maritime sector to global standards. There are 37 PPP Projects under execution in India with an investment of about Rs 29,000 crore.

Through a letter to the Minister, IPPTA has highlighted that the existing PPP Operators are facing a lot of difficulties as the Concession Agreements are quite inflexible and cannot be altered over the concession period of 30 years. This has led to creation of many stressed projects, and some more are on the verge of distress, unless urgent remedial steps are not taken. The problem areas in the Concession Agreements have been brought to the notice of the Government from time to time.

IPPTA in the letter further stated that the Government has taken the initiative to formulate a new Model Concession Agreement (MCA) keeping in view the problems being faced by the existing Concessionaires. However, the new MCA will be applicable only to new PPP Projects. This does not address the problems of the existing concessionaires who are governed under different MCAs. Having different sets of Concession Agreements for PPP Operators who came into existence at different times is not conducive to attracting huge private investments for realizing the Maritime India Vision-2030. There should be some flexibility to adopt the new provisions to the existing concessionaires. This can be easily done by signing Supplementary Agreements, for which provisions exist in the existing Concession Agreements.

There are some adverse changes proposed in the new MCA which may defeat the very purpose of making MCA more attractive to PPP players/Lenders and negate the very objective of enhancing PPP participation in port projects. Some of the provisions relating to definition of Debt Due, Total Project Cost, Adjusted Equity, Removal of charge on concessionaires’ assets, deducting Insurance Cover from the Debt Due while calculating the Terminal compensation etc. make the projects risky and un-bankable.

The government also needs to address the larger issue of presence of different operators in the same port competing for the same cargo under different regulatory regimes leading to intense intra-port competition. This may lead to underutilization of many of the existing terminals (especially bulk terminals) which are governed under a stricter regime and they therefore face an unfair level playing field.

IPPTA requests for a policy decision for giving an option to the existing concessionaires to migrate to the provisions of the new concession agreement. This move will help the existing PPP operators to adjust to the changes in business dynamics and market conditions for the remaining period of their concessions.

IANS
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