Largest container port JNPT has welcomed the Budget proposal on corporatisation of the large 12 state-run ports, and exuded confidence that it will be the first to get incorporated as a company.
“The Budget proposals are welcome…We will be the first one to get corporatised as and when the government moves on the reform,” Jawaharlal Nehru Port Trust (JNPT) chairman NN Kumar said after presentation of the Budget. With the employee unions calling for an indefinite strike starting from next Sunday, Kumar acknowledged that there will be “challenges” in this process.
He said certain legislative changes will also be required for the ports to get corporatised, which will entail an incorporation under the Companies Act.
“As the success of so-called minor ports has shown, ports can be an attractive investment possibility for the private sector. Ports in the public sector need to both attract such investment as well as leverage the huge land resources lying unused with them. To enable us to do so, public sector ports will be encouraged, to corporatise, and become companies under the Companies Act,” Jaitley had said in his speech yesterday.
The port sector is witnessing increasing interest from private players and even ports like JNPT already operate terminals under the public private partnership route wherein private entities have been given concession rights over a terminal after building it.
In FY14, the port handled 55% of the container traffic in the country.
Kumar also hailed announcements to improve the PPP model as well as the thrust on infrastructure, saying this will help the port, which recently awarded a contract to PSA of Singapore to double its capacity by building a fourth terminal.
The unions say the move to corporatise is an “enabling provision” to privatise them, saying once a company is incorporated the government share will gradually go down to minority, which will give a private party majority or full control over a port.
“Corporatisation of ports will lead to privatisation and thereby, allow private players to leverage on the existing unutilised land resources as well as improve efficiency in operations,” consultancy firm EY’s tax partner Samir Kanabar said in a statement.
