News: Mumbai Port faces expansion hurdle

(TT 14/08/2006) New Delhi - The public-private partnership (PPP) route prescribed by the government to develop new berths at major ports is turning out to be an impediment as far as the Mumbai port is concerned.

Sources said while the Mumbai port wants to use its internal resources to expedite the construction process of additional berths, it cannot go ahead as the committee on infrastructure has directed that all new berths at major ports should be developed under public-private partnership.

The issue was recently brought up at a meeting convened by the shipping ministry. The shipping secretary has reportedly told the chairperson of the Mumbai Port Trust that the port had to take permission from the committee on infrastructure before it could embark on the project.

The partnership route was devised to quicken the pace of infrastructure development based on the premise that ports do not have adequate resources to undertake these projects. However, the case is quite the opposite with the Mumbai port.

Since infrastructure projects require huge investments and have long gestation periods, private sector companies looking for quicker returns do not find them attractive.

The government clearly needs to have a more flexible approach to the issue and let ports with adequate resources proceed with their development plans instead of forcing them to scout for private partners.

A similar approach in the petroleum sector pursued for a while in the late nineties had proved to be a major hurdle for the public sector oil companies.

While Indian Oil Corporation was keen to set up a refinery at Paradip, the government had issued a diktat saying that this could only be done in partnership with private companies or what was called the joint sector.

The oil firm ran from pillar to post to tie up with foreign oil companies and managed to sign an MoU with Kuwait Petroleum Corporation after wasting valuable time and money. However, the West Asian company backed out at the last minute and this led to further delay in setting up the refinery.