Revised Model Concession Agreement will catalyze investment in Port sector
Minister for Ports, Shipping and Waterways Sarbananda Sonowal said 31 projects, worth more than Rs.14,600 crore, are to be awarded on Public Private Partnership (PPP) basis till FY2025.
More than 80 PPP/landlord projects, an investment of over Rs.56,000 crore, are at various stages, he said. Of these, 27 projects of more than Rs.16,000 crore are at implementation stage.
The Minister gave the project update with the announcement of revised Model Concession Agreement (MCA) – 2021 for PPP projects at Major Ports which will be applicable to all the future PPP projects as well as projects which are already approved by the Government but are still under bidding stage.
With many changes drawn from best practices from across the sectors and extensive stakeholder consultation, the Model Concession Agreement – 2021 (MCA), will bring more confidence to developers, investors and lenders as well as other stakeholders in the Ports sector and catalyze the investment in the sector, he said.
Looking ahead, Ministry of Ports, Shipping and Waterways expects the new MCA – 2021 to generate enthusiastic response from the stakeholders.
Talking about the key changes made in the Model Concession Agreement (MCA) – 2021, Sonowal informed that provision of Change in Cargo due to Change in Law or Unforeseen Events has been introduced for the first time.
There have been cases in the past wherein due to external and unforeseen factors, traffic for a particular commodity has dropped during the concession period thereby impacting the overall viability of the terminal. The concessionaire did not have flexibility to handle a different cargo and the asset constructed was not being utilized optimally. This provision will give the flexibility to undertake change in cargo in such situation and reduces risk for the concessionaire, he explained.
The new MCA provides flexibility to the concessionaires to fix their tariff based on market conditions which will allow level playing field for the private terminals at Major Ports to compete with private ports for cargo.
Further, to reduce risk to the lenders and make the project more bankable, provision of compensation for Concessionaire’s event of default before Commercial Operations Date (COD) has been added.
Another provision has been added allowing extension of concession period on the basis of performance and mutual agreement.
Sonowal said, overall, more clarity has been provided in terms of responsibilities of both public as well as private party while balancing the risks.
The PPP Project in the Port sector was launched in 1997 when a terminal at Jawahar Lal Nehru Port Trust (JNPT) was awarded to a private party. There has been huge progress in the PPP environment in the Port sector of the country ever since. The Model Concession Agreement (MCA) governing the PPP Projects in the Ports Sector was first introduced in the year 2008 and was subsequently revised in 2018 based on the stakeholder feedback. #tenders #projects #investment #infrastructure /fiinews.com
