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Performance
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Report No. 49 of 2015 - Performance Audit on Public Private Partnership Projects in Major Ports, Union Government, Ministry of Shipping

Date on which Report Tabled:
Fri 18 Dec, 2015
Date of sending the report to Government
Government Type
Union
Union Department
Commercial
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Sector -

Overview

For faster augmentation of infrastructure resources and to assure the user of adequate service quality by inducting latest technology and improved management practices in major ports, Government of India (GOI) decided to invite private participation through Public Private Partnership (PPP) mode. GoI sanctioned (up to March 2014) 91 PPP Projects proposing a total capacity addition of 751.71 Million Metric Ton per Annum (MMTPA). A capacity of 264.69 MMTPA was achieved from 35 projects completed by March 2014, 27 projects with capacity addition of 221.94 MMTPA were under construction and 27 projects with a proposed capacity addition of 257.97 MMTPA were under pipeline/bidding process. Two projects were terminated/dropped. The PPP projects could contribute only 33 per cent to the total capacity of major ports as it has suffered various implementation issues. In this backdrop, a Performance Audit on “PPP Projects in Major Ports” was conducted and significant audit findings are narrated below:

Significant Audit Findings

  • Jawaharlal Nehru Port Trust (JNPT) entered into an agreement with Nhava Sheva International Container Terminal (NSICT) (July 1997) wherein royalty was fixed on per Twenty Foot Equivalent Unit (TEU) basis which progressively increased from Rs.47 per TEU (1999‐2000) to Rs.2670 per TEU (2014‐15). Due to high royalty rate, the project became progressively less remunerative to the operator and threatened the viability of the project. After 18 years of operation, JNPT now proposes to migrate from royalty to revenue sharing mode. (Para 2.4.1)
  • While planning for PPP projects in the pre‐Model Concession Agreement(MCA) period, the ports and the Ministry failed to standardize the charges to be shared by the Private partner, resulting in total revenue of Rs.467.95 crore not being shared by the private partner at four ports.(Para 2.4.2)
  • Cochin Port Trust (CoPT) extended concessions valuing Rs.40.23 crore to Dubai Ports International (DPI) (concessionaire for International Container Transshipment Terminal (ICTT)) due to deviations from Request for Qualification (RFQ) terms. ICTT continued to operate at 35 per cent capacity since its commissioning in 2011 and the port has not reaped any additional return by extension of concession. (Para 3.2.1)
  • PPP mode of implementation suffered delays between RFQ and signing of Concession Agreement (CA) in 35 of the 39 projects that went through the tendering process. The delays were mainly attributed to protracted time taken for finalization of tenders, time taken for obtaining security clearance of shortlisted bidders, time taken for signing of CA and litigations by bidders during tender process.(Para 3.3)

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