New PPP Guidelines for Stuck Projects at Major Ports- Relevance for UPSC Exam
- GS Paper 3: Indian Economy- Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
New PPP Guidelines for Stuck Projects at Major Ports in News
- Recently, the Ministry of Ports, Shipping & Waterways has finalized the guidelines for dealing with Stressed Public Private Partnership (PPP) Projects at the Major Ports.
New PPP Guidelines for Stuck Projects at Major Ports
- Projects which became stressed during construction stage, i.e., Pre-COD stage: these are the work has stopped due to inability of Concessionaire to continue with the execution of the project.
- Execution stopped because of the reasons inter-alia aggressive bidding and the optimistic projections with regard to volumes & charges, unforeseen dynamic changes in their business.
- Projects, both at Pre-COD and Post-COD stage, which became stressed due to borrowings being categorized by the lenders to the projects as NPA and/or lenders have approached NCLT for recovery of their dues.
Mechanism for Resolution of Stressed Projects
- In case of the projects which became stressed during construction stage (Pre-COD stage): Concessioning Authority would pay to the Concessionaire or to the lenders of the Concessionaire, as full and final settlement for taking over the useful assets created by the Concessionaire, an amount equal to the lower of the following sums
- The value of the work done by the concessionaire in accordance with the Concession Agreement and found useful by the major port (i.e. the Concessioning Authority); or
- 90% of Debt Due as defined in the Concession Agreement; or
- Any other amount as may be mutually agreed in writing between the Concessioning Authority and the Concessionaire as per the relevant provisions of Model Concession Agreement (MCA) 2021.
- Projects which became stressed both at Pre-COD and Post-COD stage, due to borrowings being categorized by the lenders to the projects as NPA and/ or lenders have approached NCLT for recovery of their dues.
The Benefits of the new Guidelines
- The aim of the guidelines is to facilitate revival of the projects falling in the category of stressed projects.
- These guidelines will pave the way for resolution of the cases under arbitration. The port asset is likely to be put to use through re-bidding.
- This will definitely result in unlocking the blocked cargo handling capacity of approximately 27 MTPA thereby creating better trade opportunities for the prospective investors and Port Authority will start generating revenue.
- It will repose confidence in the investors/ concessionaires and also generate employment opportunities.
- Some of the long standing disputes on stressed assets at various major ports that may see early resolution are-
- Development of 13th Multipurpose Cargo (Other than Liquid/ Container Cargo) Berth on BOT Basis at Deendayal Port (1.50 MTPA approx.)
- Development of 15thMultipurpose Cargo Berth at Kandla at Deendayal Port (1.50 MTPA approx.)
- Offshore Container Terminal (OCT) at Mumbai Port (9.60 MTPA approx.)
- Construction of NCB-II at VOC Port (7.00 MTPA approx.)
- Berth EQ-1A at Visakhapatnam Port (7.36 MTPA approx.)
Significance of new PPP Guidelines
- These new PPP Guidelines will facilitate for early resolution of various issues and revival of stressed projects along with unlocking the immense potential of those projects resulting in creation of more trade and job opportunities.