Plan panel divided over ports model concession agreement

Gajendra Haldea objects to Chaturvedi panel recommendations.

The ministry of shipping has written to the Planning Commission secretariat seeking a clarification on its final stand on the model concession agreement (MCA) for the ports sector.

The ministry took the step after the advisor to deputy chairman of the Plan panel Gajendra Haldea continued to raise objections to the MCA drafted by it even as the B K Chaturvedi Committee had given its recommendations suggesting changes last year. Chaturvedi is a member of the Planning Commission and is part of the infrastructure division at the planning body.

We have written to member secretary Sudha Pillai as we do not know whether to go ahead with the draft cabinet note prepared on the basis of recommendations given by Chaturvedi or not. The reason is that the advisor continues to have certain objections and wants a full review of the MCA, a senior shipping ministry official told The Indian Express.

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The government had set up the Chaturvedi committee on ports last year to clarify the provisions of the MCA and make them more explicit so that they are less prone to litigation.

Accordingly,the committee had asked the ministry to make amendments such as replacing the concept of actual project cost with total project cost so as to include both the estimated capital cost at time of awarding and the actual capital cost of the project upon completion.

It had also recommended deleting the phrase from time to time in the clause that aligns tariff changes with the whole sale price index (WPI). The objection was that the term allows the developer to remain confused over the tariffs that will be charged during the concession period creating uncertainty over returns on investment.

However,ministry officials claim that a number of criticisms are still being raised by Haldea in various forums. Some of these include incorporating guidelines for making an assessment on change of scope of work if the need arises and having a clear definition of authoritys event of default. Ministry officials claim that the advisor has also said that the interest payable on default amount by defaulting parties as mentioned in the existing MCA has no statutory basis.