Revised concession pact for PPP projects at ports

Why in the news ?

To make the investment climate more investor friendly, Centre has approved a revised model concession pact for projects based on public private partnership (PPP) design at major ports.

New changes

• Government approved amendments in the Model Concession Agreement to make the port projects more investor-friendly and make investment climate in the port sector more attractive
• The revised Model Concession Agreement (MCA) includes providing an exit route to developers by way of divesting their equity up to 100 per cent after completion of two years from the Commercial Operation Date (COD), similar to the MCA provisions of the highway sector.
• Under provision of additional land to the concessionaire, land rent has been reduced from 200 per cent to 120 per cent of the applicable scale of rates for the proposed additional land..
• Concessionaire would pay royalty on “per MT of cargo/TEU handled” basis which would be indexed to the variations in the WPI annually. This will replace the present procedure of charging royalty which is equal to the percentage of gross revenue, quoted during bidding, calculated on the basis of upfront normative tariff ceiling prescribed by Tariff Authority for Major Ports (TAMP).
• The government said this will help to resolve the long pending grievances of public private participation (PPP) operators that revenue share is payable on ceiling tariff and price discounts are ignored.
• The problems associated with fixing storage charges by TAMP and collection of revenue share on storage charges which has plagued many projects will also get eliminated.
• The statement said concessionaire would be free to deploy higher capacity equipment/facilities/technology and carry out value engineering for higher productivity and improved utilisation and/or cost saving of project assets. In the new agreement, “actual project cost” would be replaced by “total project cost.”
• Since the viability of the project was affected, concessionaire will now be compensated for the increase and imposition of new taxes, duties etc except in respect of imposition/increase of a direct tax, both by central and state government.

Source

The hindu.