The government plans to streamline the captive berth policy for major ports

Cargo berths operated by port-dependent industries for their own use in state-owned major ports will be allowed to extend their contract through a right of first refusal (RoFR) mechanism beyond the original time frame if such facilities are re-tendered after the completion term, according to a proposal by the Ministry of Ports, shipping and waterways.

The proposal to extend the Company-Owned Moorings Agreement is a key part of the plan to amend the Policy for Award of Waterfront and Associated Land to Port Dependent Industries (PDI) in Major Ports, approved by Cabinet in 2016. Government sources said.

“The existing captive policy does not provide for a contract extension. Therefore, we are now proposing to provide for an extension, also because the concession period is usually 30 years, and when the investor has built the facility with dedicated business for the port, he can also ask for a continuation,” said an official.

The extension of the concession period for company-owned berths will be on an offer basis to reflect the changes that have taken place since the facility was first awarded, both in terms of trade and the tariff system.

The aim is to strive for a new pricing for the system, taking into account “contemporary concerns”. “This is necessary to re-evaluate the asset based on the current market scenario/dynamics while also extending the concession period,” the official explained.

“Once the duration has expired, a fixed berth will be re-bid, with the existing operator being given the first right of refusal to meet the highest bid and continue to operate the berth,” the official said.

The changes, currently being drafted, will make the captured berth policy “uniform” across all major ports. Many of the captive berths currently in service predate the policy, which was introduced in 2016 with Cabinet approval. These captive berths are now subject to different agreements for different durations. Some of them are due for renewal soon.

The proposed changes must be ratified by the Cabinet.

“Many industries in and around a major port depend on the company’s own facility. If the prison bunk is suddenly taken away, they are all in danger. Therefore, it is imperative to give the existing operator a right of first refusal,” said the vice chairman of one of the major ports on the east coast.

The 2016 policy will be streamlined to bring all facilities onto one platform, he added.

In relation to a major port, a port-dependent industry (PDI) is defined as an entity (including all its affiliates) that depends on that major port for the import and/or export of at least 70 percent of the proposed capacity of the proposed self-carrying facility .

Making the best use of land and shores available to major ports is vital, the cabinet said when approving the captive policy in 2016.

“The aim of the policy is to ensure uniformity and transparency in the procedure for allocating captive facilities. The policy will help generate long-term committed business for the major ports by facilitating the development and operation of dedicated port facilities by industries that are essentially dependent on a particular major port for the import and/or export of their cargo and hence play a catalytic role in ultimately realizing the goals of port-led development,” it said.

The allocation of coastal and associated land to port-based industries on a public-private partnership (PPP) and captive basis is one of the areas identified for private sector investment in major ports.

Port Dependent Industries (PDI) is granted concessions to set up dedicated facilities in major ports for importing and exporting cargo and storing it before transport to destination for 30 years under the policy completed in 2016.

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