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Govt’s Rs 7,000-cr port monetisation drive delayed on security clearance

Govt’s Rs 7,000-cr port monetisation drive delayed on security clearance

The Ministry of Ports, Shipping and Waterways could award projects worth only Rs 1,000 crore in FY22, achieving barely 14% of the target

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Ports  | privatisation

The government’s ambitious asset monetisation drive for ports has gotten off to a rocky start, with the Ministry of Ports, Shipping and Waterways (MoPSW) having been able to award projects worth only 14 per cent of the target amount in 2021-22.

The ministry has been able to monetise three projects worth approximately Rs 1000 crore, falling significantly short of the target of Rs 6924 crore from 13 projects for this fiscal year. According to NITI Aayog, the national monetisation pipeline (NMP) for the sector encompasses nine of India’s 12 major ports.

“All 13 projects have been processed and MoPSW is ready to award them, but the projects are yet to get security clearance. While three projects have been awarded, the remaining ten will be awarded once they’re cleared by the concerned ministries,” a senior official aware of the matter told Business Standard.

Awarding of contracts for these projects can only take place after obtaining separate security clearances from the Ministry of Defence, Ministry of External Affairs, and Ministry of Home Affairs, as the projects fall in strategic areas. As per government regulations, the final security clearance accorded to a bidder is typically valid for five years.

Sources in MoPSW indicated that there is active interest in the tenders that have been floated for monetisation of several port operations and the ministry is optimistic about its monetisation drive in the current and upcoming financial years, despite delays in security clearances.

The 13 projects include big-ticket items like development of western dock captive berth at Paradip Port for Rs 3000 crore, leasing out of a container terminal at Jawaharlal Nehru Port Trust (JNPT) for Rs 863 crore, and operations and management (O&M) of Mumbai International Cruise Terminal for Rs 495 crore.

According to the NMP plan released by NITI Aayog, the central government plans to monetise 31 cargo berths valued at Rs 12,828 crore by the end of 2024-25, accounting for 2 per cent of the overarching monetisation target of Rs 6 trillion. The shipping ministry is also understood to have tweaked its monetisation targets for this fiscal year in view of the shortfall in FY22, which will be on the agenda in the upcoming apex committee meeting of the ministry’s flagship Sagarmala plan.

The NMP lays out port assets worth Rs 4,680 crore in FY23, Rs 915 crore in FY24, and Rs 1940 crore in FY25 for leasing out to private entities. The contracts will be awarded for a 30-year period and actual capital investment is likely to happen in phases during the initial years in the envisaged concession period.

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