September 07, 2008

Major ports may get financial and functional autonomy

It is reported that the centre is mulling corporatization of Jawaharlal Nehru Port Trust and Kandla ports, in what could be a first major step towards giving financial and functional autonomy to major ports. After corporatization, the ports would be free to borrow from the market and write off losses.

A final decision has not been taken as the centre is still seeking views of all 12 major port trusts. However, sources said that the shipping ministry wants to tread cautiously and may take up only these 2 ports to start with. Ennore port had got the status 2 years ago.

Sources said that once corporatised, the ports would not be free to take their decisions. Apart from this, they would have the freedom to restructure their boards. A port trust usually has 15 to 20 members, with representatives from the respective state governments, Railways, and the Customs department. Ennore port’s board has four to five members. The centre holds 100% equity.

As the port is engaged in around 70 arbitration cases, there was scepticism in the shipping ministry over giving the status to other ports. However, as most of these cases related to Chennai Port Trust, these would have no direct bearing on the latter’s functioning.

Moreover, ministry officials said that the model had run for only 2 years and it would not be fair to discard it so early. The ministry had last year set up a 3 member committee to study the running of Ennore port, which is managed by a board of directors and is governed by the Companies Act. The committee’s report, submitted to the ministry recently, was sent to all port trusts for views.

Ministry sources said that corporatisation will provide ports greater financial autonomy and enable them to raise loans from the market, set tariffs without consulting the tariff authority for major ports and run overdrafts.