India goes for FMC-type new Ports Act

The draft of the Indian Ports (Consolidated) Act 2010 is likely to come before the Lok Sabha of the Indian Parliament during the coming Winter Session.

The proposed Act is said to be in line with the Federal Maritime Commission (FMC) of USA, the independent regulatory agency responsible for the regulation of ocean borne transportation in the foreign commerce.

If it gets through Parliament, all major ports as well as non-major ports most of which are privately operated will be under an independent regulator.

It is believed that the primary objective is to provide the Central Government with controlling powers over all ports in the country. Also the move is intended to prevent haphazard growth which could create redundancy in port capacity.

The total capacity available with the 12 major ports which are under the control of the Central Government as on 30 June 2010 was 619.88 million tonnes, while non-major ports numbering over 350 and which are subject to the respective State governments contributed 355.06 million tonnes.

Union Shipping Secretary Government of India K. Mohandas stated: “Most major ports were already operating at 80% to 85% capacity which was not a healthy situation. A $ 12.4 billion capacity enhancement scheme for major ports is already underway. It envisages taking the capacity of 12 major ports to one billion tonnes by March 2012.”

However, the past few years has seen competition between the major ports and private ports (non-major ports) on the rise with private ports shoring up their capacities to attract cargo quite often at the cost of major ports.

On the other hand, unlike private ports, the major ports are subjected to the Tariff Authority for Major Ports (TAMP) constituted in April 1997 to regulate all tariffs of the ports. This is one chief factor favouring private ports who are not constrained by any tariff regulatory authority thus giving them an edge over major ports.

Another matter of concern is the implementation of various conventions in force especially with regard to safety and security aspects. Ministry sources inform that the Director General of Shipping (DGS), the maritime administrator too faces difficulty in exercising its authority.

The Nautical Advisor to the Government of India Capt. M. M. Saggi is supposed to have gone on record stating that it is difficult to ensure whether the conventions are being implemented properly by all non-major ports. There have been instances of the Gujarat Maritime Board (under the Gujarat State Government) having issued notifications which clash directly with what the DGS had issued.

There have also been delays and impediments in acquiring statistics, logistical information and other details from non-major ports as the central authorities have to route their requests through the respective State Governments. Fears are being expressed that without proper coordination among all ports future development could meet up with capacity redundancy, severe losses and wastage.

Mohandas called a meeting on 9 September 2010 in Delhi when he put forth an idea of bringing all ports under one banner by instituting a trade organisation called the Association of Indian ports and Terminals.

This did not find favour with the Indian Private Ports and Terminals Association (IPPTA) which has been in existence since 2004. There was agreement from some sections, but R. Kishore, President of IPPTA, categorically turned it down. He on the contrary suggested the existence of two different associations simultaneously.  A committee is looking into this issue.

If the Indian Ports (Consolidated) Act 2010 becomes a law, it will replace the Major Port Trust Act 1958 and the Indian Port’s Act of 1908. With the new act the Central Government expects to control both the major ports as well as non major ports.