Presentation by Kamgar Ekta Committee
Two big steps were taken towards the privatisation of ports in Feb 2021. In her budget speech on February 1, the Finance Minister announced that “Major Ports will be moving from managing their operational services on their own to a model where a private partner will manage it for them. For the purpose, 7 projects worth more than 2,000 crores will be offered by the Major Ports on Public Private Partnership mode in FY21-22.” Soon after this, the Rajya Sabha passed the Major Ports Authority Bill on February 10. (See Box 1 about Port Sector in India)
Box 1: Port Sector in India
Ports have a great strategic importance for external trade. They handle around 95% of India’s external trade by volume and 70% by value. External trade is an important contributor the country’s economy with exports contributing about 20 percent to India’s GDP.
There are 12 “Major Ports” and around 200 “Minor Ports” along the 7500 km long coast line of our country. The total cargo handled by all ports together was 1320 million tonnes (MT) in 2019-20.
Actually the qualification “Major” and “Minor” for ports is quite misleading, since it is not based on size or quantity handled, but on ownership. The 12 “Major” ports are all owned by the Central Government, with 11 of them under the Major Port Trust Act 1963 and another formed as a company. Out of the over 200 “Minor” ports, only 62 handle cargo, and most of them are privately owned. The surprising thing is that the largest “Minor” port of Mundra is much bigger in terms of cargo handled than many “Major” ports!
The graph above shows how cargo handled by Indian ports has been rapidly growing from 1995 to 2016. It is also evident that the growth rate in the “Minor” ports is much higher than in the government owned “Major” ones. In fact the traffic handled by “Minor” ports has surged from a mere 10% in 1981 to nearly half (47%) in 2019-20.
More and more general cargo is now handled through containers. The total container handling berths in India are 34. JNPT is the largest container port with 11 berths. Only 3 of these are run by the Port Trust and the remaining are with private operators. The three big international operators, APM Terminals, DP World, and PSA International operate at JNPT.
The privatisation of ports began in 1997, under the Congress government. The Nhava Sheva International Container Terminal (NSICT) at JNPT (Jawaharlal Nehru Port Trust), Maharashtra, was the first terminal to be developed on PPP (public private partnership) basis by DP World, one of the biggest multinationals in this field. 100% Foreign Direct Investment (FDI) was allowed under the automatic route for ports and harbours. The FDI received since 2000 amounts to $1.63 billion. A 10-year tax holiday was given to Indian and foreign capitalists to develop, maintain and operate private ports, inland waterways and inland ports.
Successive Central Governments have adopted a two pronged strategy for privatisation of ports. Firstly, they encourage the setting up of privately owned “Minor” ports in a number of ways. They support locations that would allow them to prosper at the cost of nearby “Major ports”. For instance, the privately owned Mundra, Dighi and Vizhinjam were promoted at the cost of government-owned Kandla, JNPT and Kochi respectively.
The other strategy is of handing over profitable berths at government owned ports to private operators. (Berths are places where the ships are parked at docks). Soon government owned ports will be left with only non-profitable berths. Government will use that to justify the sell off of the ports themselves. Out of the total of 240 berths at major ports, 69 (28%) are already run by private operators under the PPP (Public Private Partnership) model.
In this context we should remember that the PPP model has always been implemented by various governments in such a way that the government bears all the risks and losses, while the private owners make the profits. We should also remember that this indirectly impacts the people. The government gets its money by taxing people. The lion’s share of taxes is indirect taxes like the GST, excise, etc. The poorest of the poor pay indirect taxes whenever they purchase their necessities in the market. So PPP model is nothing but a way of transferring money from the toilers to the super rich monopolies.
A further push to privatisation has been given through The Major Ports Authority Act, 2020. The Bill was passed by the Lok Sabha on 23rd September 2020 and by the Rajya Sabha on 10th February 2021. It is based on the recommendations of the World Bank Report of May 2011. The new port law will open floodgates for privatisation of operational cargo berths. Eleven of the 12 ports owned by the Central government and run as ‘trusts’ will be converted into ‘authorities’. The ‘Port Authority’ formed under the proposed Major Port Authorities Act will play the role of a landlord — a model wherein the ownership will remain with the government while private firms carry out port operations. The landlord port, in return, gets a share of the revenue from the private firm. (See Box 2 for details of Major Port Authorities Act)
Box 2: Major Port Authorities Act, 2020
The Major Ports Authority Act 2020 will apply to the major ports of Chennai, Cochin, Jawaharlal Nehru Port, Kandla, Kolkata, Mumbai, New Mangalore, Mormugao, Paradip, V.O. Chidambaranar, and Vishakhapatnam. The Act allows the Board to use its property, assets and funds as deemed fit for the development of the major port. Currently, the Tariff Authority for Major Ports, established under the 1963 Act, fixes the rates for assets and services available at ports. Under the Act, the Board or committees appointed by the Board will determine these rates.
Under the Act, to meet its capital and working expenditure requirements, the Board may raise loans from: (i) any scheduled bank or financial institution within India, or (ii) any financial institution outside India. The Bill defines PPP projects as projects taken up through a concession contract by the Board. For such projects, the Board may fix the tariff for the initial bidding purposes. The appointed concessionaire will be free to fix the actual tariffs based on market conditions, and other conditions as may be notified.
The Landlord Model for Ports is another way of privatisation. The investment for building a port, including acquisition of land, is done by the government. Once built, it is handed over to capitalists for making profit by operating the port.
While defending the Bill, the Ports, Shipping and Waterways Minister Mansukh Mandaviya made a false declaration in February this year when he claimed that the Major Ports Authority Bill, 2020 does not aim to privatise 12 major ports but aims “to provide autonomy to these ports and boost their decision-making powers in order to compete with private ports.”
The push to privatisation started even before the Act was made. Even before the Bill was passed in the Rajya Sabha, the Ministry directed all major port trusts “to prepare a plan to take up new and existing terminals in PPP mode or landlord model”.
In response to the directive, JNP Trust (JNPT) has cleared a proposal to privatise the container terminal which it has been running itself. The New Mangalore Port Trust (NMPT) has called for expressions of interest for privatising Berth No 9 of its oil dock arm on operate, maintain and marketing basis for handling POL (petroleum) and LPG cargo.
Workers know that privatisation of ports is against their interests and they have been protesting against it. Their fears about loss of jobs have been borne out by the fact that the number of regular workers at the 12 central government-controlled ports fell to 51,000 by 2013 from nearly 100,000 about a decade ago. It further fell to 29,000 by 2019.
Villagers from 18 villages who gave their land 35-40 years ago for JNPT have been supporting the fight of the workers. JNPT has 8000 acres of land. Dinesh Patil, the leader of the villagers said “The government had then promised a job to one family member from every affected person’s house, and 12.5% of their land in another area. There are still more than two thousand cases in which this settlement has not been done. Privatisation will further complicate their situation”.
There are 1,430 workers who are employed by JNPT. With privatisation, it is feared that all of them will lose their jobs. There are also more than four thousand people who live in the periphery who directly dependent on JNPT for their businesses.
Despite the opposition of workers and people the privatisation of ports has continued over the last two decades. Both Indian capitalists and multinational port operators have been taking over Indian ports. Adani Ports has become a dominant player in its sector. It operates 10 strategically located ports on the Indian coastline. It has acquired another two ports. The latest is Dighi port in Maharashtra, which is to be developed as a private alternative to government owned JNPT with an investment of Rs. 10,000 crore. The Mundra Port of Adani is the largest private port of India, located in Kutch, Gujarat. It is also a Special Economic Zone (SEZ). In 2019–20, it handled 139 million tonnes of cargo. (See Box 3 about Private Ports in India)
Box 3: Private Ports in India
Gujarat is the hub of private ports in India. The Gujarat coast is dotted with ports and is home of large ports including the government owned- Kandla port and privately owned ports of Mundra, Pipavav, Dahej and Hazira. Gujarat also houses the country’s largest cargo handling port of Mundra. The state accounted for as much as 70 percent of total cargo routed through minor ports in the country, followed by Andhra Pradesh at 16 percent, and Maharashtra at 7 percent. As a result, these three states together represented about 93 percent of minor ports’ seaborne trade in fiscal 2017-2018.
It is important to note that Adani is also the largest airport operator of the country. Thus, a private capitalist will dominate the country’s cargo movement both through sea and air.
Three of the world’s five largest port operators – PSA of Singapore, DP World of Dubai and APM Terminals of Netherlands– are already active in India. P&O Ports acquired 100% stake in Mundra International Container Terminal, which is now the second largest container terminal in India. The Gujarat Pipavav Port Ltd. is a PPP with 43.01% stake of APM Terminals. Currently, the port has the container capacity of 1.35 million twenty-foot equivalent units (TEUs), 5 million tonnes of dry cargo capacity and 2 million tonnes of liquid cargo capacity. DP World, the largest multinational port operator in the country, already operates at Mundra, JNPT, Kochi, Chennai, Visakhapatnam and Kulpi ports.
|Private ports have thrived at the cost of public sector ports. In 1998-1999, the public sector port of Kandla handled 40.6 Million Tonnes cargo and all intermediate and minor ports in Gujarat, put together, handled just 25.1 Million Tonnes; in FY2014, Gujarat’s minor and intermediate ports handled close to 4 times of what Kandla handled! Today, India’s biggest port by traffic is the Mundra Port of Adani and the biggest container terminal is of Gateway Terminal India – a unit of the Danish shipping group A P Moller-Maersk Group A/S. Both these are in the private sector.
The Mundra Port, which is in the process of doubling its container handling capacity, has been aggressively positioning itself to compete with JNPT, India’s biggest public sector container handler. Mundra is about 300 nautical miles from JNPT. The Chennai Port is battling ever-intensifying competition from a string of new minor ports, such as Krishnapatnam, Gangavaram, and Kattupalli.
The Adani Ports and Special Economic Zone Ltd. (APSEZ) started its operations in 1998 and has become the largest private sector port developer and operator in India. It operates Gujarat’s Mundra Port, the largest commercial port in India and overall had more than 15% share in India’s cargo in FY20. APSEZ earned a revenue of Rs. 11,873 crore (US$ 1.68 billion) in FY20 (Financial Year 2020). It has an installed capacity of 410 million metric tonnes (MMT) in FY20 and handled a total of 208 MMT in cargo in CY2019 (Calendar year 2019).
Like Shashank Kulkarni, Secretary General, Indian Private Ports & Terminals Association declared, “Private players will run all major ports’ terminals in the future”.
Port Privatisation is the agenda of Indian and foreign monopolies who want control over international trade. They see it as an avenue of profit with most investment coming from public funds. We should remember that this agenda has been pursued by all political parties in power. The united opposition by port workers along with workers of other public sectors and people is required to stop it.