The government is set to finalise the model concession agreement (MCA) for ports soon. The move is likely to give a major boost to private investment in port development in the country. Sources said the MCA should be ready by end of the year or early next year.
One of the major reasons for the delay in finalising the agreement was the lack of consensus over the tariff fixation model. ?This has been sorted out now and we should be able to finalise the MCA in another two to three months,? a government source said.
The tariff fixing formula would be based on the normative project report prepared by the port authority and would also be linked to the efficiency of services provided by the bidders at a port. The port authorities would also specify the services they expect from the developer.
The Tariff Authority For Major Ports (TAMP) will fix the tariff ceiling, which will be linked to the wholesale price index and would be reviewed periodically.
?In this way, the tariff would be set upfront and give a complete picture of the project to the bidder who would be able to calculate his risk against the projected revenue,? the source pointed out.
The formula was reached after much discussion and debate between the department of shipping and the planning commission, who were at loggerheads for over a year now, leading to a delay in finalisation of both the concession agreement as well as the tariff model. The government hopes to get about 64% of the $ 13.5 billion required for the development of ports through the public private partnership route. The finalisation of the MCA and the tariff setting method will help kick start the process.