After the deadly earthquake and a following tsunami in Japan caused a damage of $309 billion, India has started work on rules that will make it mandatory for at least 13 major ports to have insurance.
While major ports in India have been indifferent to preventing the financial losses due earthquake-like incidents, some minor ports have got insurance although getting such cover is optional. The government wants all ports in the country to reduce the possibility of financial losses by insuring their properties against earthquake and tsunami. It is worth noting that many Japanese ports were inundated by water after tsunami last month. The ministry of shipping has begun internal discussions on how to frame an enabling policy to this effect. ?We have felt the need to insure port properties in the country. The main requirement is at major ports as minor ports are accustomed to the habit of taking insurance,? a senior official in shipping ministry told FE.
At present, the government has established provisions under the public private partnership model, being used for developing cargo terminals, that require the private firms to insure the properties created by them at major ports. However, the common use assets at major ports like bridges and channels, and even land which are owned by major port trusts are not insured. Now the government wants such properties also to be insured mandatorily.
“The issue here is that government properties are generally not insured, and you know the major ports are nothing but entities of the government. Minor ports and even private properties at major ports are insured,” Indian Ports Association’s managing director A Janardhana Rao said. Experts said insurance would increase total cost of operation for major ports. This may increase pressure on ports to demand a higher tariff for cargo handling services. But tariffs are currently controlled by the Centre.