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"So far, not a single project has been developed under the joint venture format after the major ports sector was thrown open to private sector participation,'' Ministry sources said.

NEW DELHI, April 9

THE Ministry of Shipping is looking at revamping the joint venture policy in major ports that has been a non-starter five years after guidelines in this regard were announced in June 1998.

The joint venture policy was reviewed by the Shipping Ministry during an inter-active meeting held here on Tuesday with representatives from the private sector and other stake holders.

The guidelines issued by the Shipping Ministry on June 1, 1998, provide for formation of joint ventures between a major port and a Government-owned foreign port, a major port and a minor port and a major port and a private company or a consortium of private companies to implement cargo handling facilities on a build, operate and transfer (BOT) basis.

The guidelines also permit bilateral agreements with foreign Governments for import of technology, expertise and managerial practices.

The guidelines also allowed major port trusts to pick-up a minimum equity of 11 per cent in joint venture projects on the strength of which the company could raise resources from the market at competitive rates.

But, the joint venture policy has failed to take-off due to glitches in its implementation.

"So far, not a single project has been developed under the joint venture format after the major ports sector was thrown open to private sector participation,'' Ministry sources said.

The closest that the Ministry came to implementing the joint venture policy was to develop the Greenfield minor port of Gangavaram through a JV between the Visakhapatnam Port Trust and the Andhra Padesh Government.

But, this fell through after the State Government rejected the Shipping Ministry's plan and decided to develop Gangavaram with the aid of a private developer.

During the Tuesday meeting, private operators questioned the relevance of a joint venture policy when a well-planned BOT policy was already put in place by the Government.

"If a project is viable, the private sector would lap it up. But, if the project is not viable, the Ministry should re-work it and offer it again to the private sector. The chances of joint venture projects succeeding in major ports are very remote,'' a private operator pointed out.

The private operators feel that there is a conflict of interest involved when port trusts become a partner in a joint venture with private operators for setting up projects at major ports.

"If a port trust is a joint venture partner, then as a equity holder in the joint venture company, he would try and minimise the pay-outs to the concession granter, i.e. the port trusts themselves,'' says a private port operator.

But, as a land-lord/concession granter, the port trusts would try and maximise the revenue share from the operating joint venture company.

"With the Government adopting the revenue-sharing model for awarding projects, this would give rise to a conflict of interest for the major port trusts,'' he observed.

The participants also broached the issue of the quantum of equity to be held by the port trusts in joint venture projects.

Top officials from the Shipping Ministry who were present at the meeting explained that the joint venture policy was a good model for developing projects at major ports.

"The joint venture policy needs to be pursued despite its short-comings. If necessary, we will revamp the joint venture policy to instil confidence among private operators. The first choice should be to implement projects on a pure BOT format with private investments. If BOT is not workable, joint venture should be tried out,'' a senior official said.

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