Land to lift port revenues

Vaishnavi Bala Posted online: Wednesday, Jan 08, 2014 at 0000 hrs
THE new land use policy, approved by the Union cabinet last week, will pave the way for India's 12 major ports to optimise land use in about 2.65 lakh acres. Industry experts say while this is a step forward for port authorities to monetise their land, ports will seek more clarity on the policy.

Under the new policy, the major ports can allot the land owned or managed by the port trusts through licences or leases and the valuation of the land will be done based on the market value set by TAMP, that is, the Tariff Authority for Major Ports. TAMP would do the land valuation after consulting the stakeholders.

Chairman of Kolkata and Vishakapatnam port trusts RPS Kahlon says while a proposal for non-operational activities on land is desired at the Kolkata port, the policy approval will lead to higher revenues at the Vishakapatnam port. “The Vishakapatnam port will see an uptick in revenue as the port would be able to lease out land on a long-term basis for storing and processing commodities like iron, coal and fertilisers. But the leasing of land will take some time as it needs more planning on the part of ports.”

With the new policy, land can be leased up to 30 years by a port with the approval of its board of trustees. Leasing above 30 years, and for a maximum of up to 99 years, will need the shipping ministry's approval.

Earlier, land could be leased for a maximum 11 months granted by port chairman. Also, the chairman, with the prior approval of the board, could also allot land inside the custom bound area on a medium-term lease of up to 10 years to port users for setting up port related structures such as conveyors, silos, pipelines, temporary transit sheds, bagging & stitching plants and weigh-bridges, but not permanent structures like tank farms, godowns and warehouses, etc.

Residential land at some ports trusts, like for Mumbai, is yet to be discussed by the ministry. The policy excludes residential land for Kandla, Mumbai and Kolkata ports, an issue which is being addressed separately.

Industry experts point out that the term “port-related activities” is ambiguous. “It is difficult to categorically distinguish between operational and non-operational activities. This needs more clarity,” says a ports consultant at an international firm.

According to the new guidelines, ports can lease out land through a tender to develop storage facilities and cargo-related activities. “It is a significant step from the ministry as it leads to greater transparency and can increase the efficiency at ports. Most ports had not been able to leverage land over the last few years,” says JNPT's chairman-in-charge NN Kumar.

Agencies essential for the functioning of the port, like customs, health, electricity and government schools and colleges, would get a discount on rents of up to 75% from the port trusts.

“With this, the shipping ministry has vested more powers with the individual major ports. Individual ports would have a better understanding about the value of the land and what use it can be put to, and who the tenants can be,” says Anand Sharma, director, Mantrana Maritime Advisory.