The Finance ministry and the shipping ministry are working closely to set up a specialised financing institution for maritime sector within the first quarter of 2011-12 to take full advantage of the R5,000-crore borrowing window for port sector, announced in the general Budget last month.
As per the announcement by finance minister Pranab Mukherjee on February 28, ports can raise R5,000 crore through issue of tax-free bonds during the coming financial year. This was part of a wider package of R30,000-crore for infrastructure development in the country, which is falling short of investment target by 30%. But unlike other infrastructure sectors, ports?sector doesn’t have any entity that has the wherewithal of raising the sum.??We are working to find out a solution and decision will be taken shortly,? R Gopalan, secretary in department of economic affairs of finance ministry, told FE.
Shipping ministry officials confirmed that one option on the table is authorising the proposed Maritime Finance Institution to issue the bonds to public. (The Financial Express had reported on February 11 that shipping ministry is planning to set up the institution to ease the flow of funds to shipping and port sectors in the country, but no timeline was fixed for the same.)
?There is no specific umbrella institution in the port sector to undertake bonds issue. It requires a strong structural set up. We are thinking of giving the right to issue bonds to Maritime Finance Corporation,? shipping secretary K Mohandas told FE. He said that some key decisions, including on the initial capital of the corporation, have to be taken. ?The decisions will have to be taken in March and the corporation will be set up early 2011-12.
While the government is keeping busy in preparing the ground for raising the sum, ports are looking forward to easier access to money for works where private investment is minimal. ?Such a borrowing window is being facilitated for the first time and I hope it will reduce our frequent visits to banks and other financial institutions, for whom ports are last in the priority list,? a senior official in New Mangalore Port said.
Indian Ports Association (IPA) said besides setting up a specialised finance corporation the government should also clarify whether the money so raised will be available for major ports only or non-major ports can also use it.