Restructuring and regulation in the ports sector: Indian experience S Sundar Distinguished 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 )  High vessel turn around time (8.3 days in )  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 : Maharashtra : 70 -Tamil Nadu : 129 Total 4714  Expected Investment(in crores of Rs.) -Andhra Pradesh : Gujarat : Maharashtra : Tamil Nadu : 3227 Total : 26797

Other Results (contd.)  Pre-berthing delay has been reduced to 0.34 days( )  High vessel turn around time has been reduced to 3.8 days in  Labour force has decreased from approximately (1995) to (2001)

Thank You