Indian Ports Association - Private Participation LEGAL

Guidelines to be followed by Major Port Trust for private participation in the major ports

Guidelines on Privatisation

Leasing out existing assets of the Port

As far as leasing out the existing facilities to the private sector is concerned, such proposals should be normally considered only if such leasing will result in additional investment and augmentation/ upgradation of the existing facilities/equipment and in increased traffic throughput/profitability/ improvement in quality of service/better productivity. The proposals will be considered on a case to case basis on merits, subject to the following;

The need will be assessed by the Port Trust Board.

Open tenders will be issued for leasing of existing assets of the private sector.

(c) The period of lease will be decided upon by the respective Port Trust in each case, with the maximum period not exceeding 30 years. At the end of the lease period the assets will revert back to the port free of coat including equipment and augmented portion of assets, if any.

(d) The lessee will undertake to keep the property of the port leased to him in good condition and return in to the port at the end of the lease period in good condition subject to fair wear and tear.

(e) Bids will be invited based on two cover system consisting of technical and financial bids. Financial bids of only those bidders will be opened who have been technically qualified.

(f) The bidders will be asked to indicate in their financial bids (i) an upfront fee for the lease; (ii) royalty per tone of the cargo to be 1 handled; (iii) the minimum cargo which they will be willing to guarantee; (iv) the lease rent per unit area; and (v) any other financial parameter to be specified depending upon the facility to be leased

(g) Comparative financial evaluation of offers received from bidders who have been technically qualified will be based on the concept of maximum realisation to the port on net present value basis calculated by using discounting rate as periodically fixed by the Government. Royalty for the purpose of analysis will be based on the minimum traffic which the entrepreneur guarantees.

(h) In case any additional equipments are required to be put up by the entrepreneur, the port will ensure that private entrepreneur puts up modern equipment and in new condition.

(ii) Construction/creation of additional assets

Construction and operation of container terminals.
Construction and operation of bulk, break bulk, multipurpose and specialised cargo berths.
Warehousing, Container Freight Stations. storage facilities and tank farms.

Conditions

The need for the project and the optimum land/waterfront required will be assessed by the Port Trust Board.
The requirement should be consistent with the Perspective Plan/Master Plan/Land Use Plan of the port
Open tenders will be invited for private sector participation on BOT basis.
The period of licence including construction period will be decided upon by the respective Port Trust in each case, with the maximum period not exceeding 30 years.
At the end of the BOT period. all the assets shall revert back to the port free of cost.
Bids will be invited based on two cover system consisting of technical and financial bids. Financial bids of only chose bidders will be opened who have been technically qualified.
The bidders will be asked to indicate in their financial bids (I) an upfront fee for the licence: (ii) royalty per tonne of the cargo to be handled; (iii) the minimum cargo which they will be willing to guarantee; (iv) the lease rent per unit area of land/waterfront; and (v) any other financial parameter to be specified depending upon the facility to be created.
Comparative financial evaluation of offers received from bidders who have been technically qualified will be based on the concept of maximum realisation to the Port on Net Present Value (NPV) basis calculated by using discounting rate as periodically Fixed by the Government. Royalty for the purpose of analysis will be based on the minimum traffic which the entrepreneur guarantees.
It will be ensured by port that the private entrepreneur puts up equipment using modern technology and in new condition.

(iii) Carnage/handling equipment

Conditions

The need for providing cranage/handling equipment by the private sector on an existing berth will be assessed by the port.
pen tenders will be issued for private sector participation on BOT basis.
Bids will be invited based on two cover system consisting of technical and financial bids. Financial bids of only those bidders will be opened who have been technically qualified.
The financial evaluation will be done on the basis of maximum realisation to the Port. The bidders will be asked to indicate in their financial bid (i) an upfront fee for the licence; (ii) royalty per tonne of cargo to be handled; (iii) the minimum cargo handling which the entrepreneur is willing to guarantee, or pay for.

There may not be any requirement .to give any land on lease. If there is requirement for land for parking the equipment or for maintenance workshop etc., the financial bid should also contain the lease rent the bidder is willing to pay.

The Period of licence shall be fixed by the Port Trust in each case keeping in view the useful life of the equipment. At the and of the licence period the assets will revert to Port Trust free of cost.
The private entrepreneur will be required to install equipment using modern technology and in new condition.
The financial bids will be evaluated on the basis of NPV of the returns to the port, using a discount race fixed periodically by the Government.

(iv) Setting up of Captive Power Plant

The need for the project will be assessed by the port.
Guidelines of Ministry of Power and other authorities like Central Electricity Authority/ State Electricity Board etc. have co be followed and clearances If any obtained.
Open tenders will be invited with the stipulation that modern machinery/technology will be installed and in new condition.
Bids will be based on two cover system consisting of technical and financial bids. Financial bids of only those bidders will be opened who have been technically qualified.
The private sector participation would be on BOT basis with a Iicence period to be decided by the Port Trust in each case with a maximum period not exceeding 30 years (including construction period) after which the facility will revert back to port free of cost.
The tariff for the electricity sold to the port would be fixed by the Port Trust in terms of the tender. It should in any case not be more than the State Electricity Board tariff applicable to the port.
The port may charge an upfront fee and lease rent for the land for the Captive Power Plant at market rates. The basis of financial evaluation will be the lowest tariff quoted for sale of electricity to the port.
Environmental clearance and other statutory clearances will be obtained by the Port Trust.
The electricity requirement of the port should be fully met and thereafter the entrepreneur may be permitted to sell its surplus power.
Specified level of supply of power to the port will be maintained by the BOT developer, failing which penalties should be imposed.

(v) Dry docking and ship repair facilities

The basic principles will be the same as per Models (ii) (I), (ii) (2), and (ii) (3) above However.

Financial evaluation will be based upon:

(a) an upfront fee;

(b) the minimum guaranteed amount which the entrepreneur undertakes to pay per annum;

(c) the lease rent per unit area for the land/waterfront.

The financial evaluation will be based on the concept of maximum realisation to the Port, using NPV analysis.
Leasing of equipment/floating crafts from the private sector

These will be lease contracts, and evaluation would be on the basis of least cost to the port. The ports will have co ensure leasing of modern equipment/craft and in new condition. The equipment/craft can be taken on dry or wet lease This can be combined with maintenance contact if required. If dry lease is resorted m, training of port personnel, if required, may also be included as part of the lease.

(iv) Pilotage

The need will be assessed by the Port Trust Board, on the basis of existing floating crafts/pilots.
Tenders with eligibility for only Indian Nationals will be floated in a two cover procedure.
The period of contract will be decided by the Port Trust Board.
Subject to being technically qualified/short listed by the Tender Evalution Committee, the bidders will be financially evaluated on the basis of least cost to the port.

(v) Captive facilities for port based industries

Cases where 100% captive facilities (land/water-front) including captive oil jetties. platforms or SBMs are sought by port based industries, including Central/State PSUs, may be considered. if they do not conflict with the Master Plan of the Port. Such cases may be considered, without recourse to a tender, provided such industries are port specific and are approved by the concerned administrate Ministries, and the industry is willing to pay the maximum realisation which the port may determine taking into account all relevant factors. For this purpose, a port based industry will be one which requires 100% captive berths/back up area for the purposes of import of raw material and/or export of finished products and/or transportation of raw materials/finished products. General guidelines of BOT wherever applicable will be applied to cases of captive facilities.

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