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Editorial: ‘SAROD-Ports’ – A Game Changer

Chennai, 21 Oct 2020:

The shipping ministry has launched a dispute redressal portal as it prepares to bring private companies to operate major ports in the country. Union Minister for Shipping Mansukh Mandaviya launched ‘SAROD-Ports’ (Society for Affordable Redressal of Disputes – Ports) through a virtual ceremony recently.

Mandaviya said that SAROD-Ports will be a game changer and it will become the pivotal mechanism in the port sector of India and added that. “SAROD-Ports will resolve the disputes in (a) fair and just manner while saving huge amounts of legal expenditure and time.”

Sanjiv Ranjan, Secretary, shipping ministry, said that the portal will help instil confidence in the private sector as ports shift to landlord model going forward. “SAROD-Ports will instil confidence in the private players and will ensure right kind of environment for our partners,” Ranjan said.

“It will promote ease of doing business in the maritime sector because of the fast, timely, cost effective and robust dispute resolution mechanism,” he added. Under the landlord model, the port authority acts as the regulatory body as well as the landlord, while private entities handle port operations.

The rollout of SAROD-Ports for affordable and timely resolution of maritime-related disputes is a credit positive for the sector even as its success remains to be seen, ratings agency Icra said.

The initiative is targeted towards attracting more private sector investments, Icra stated. ‘The launch of ‘SAROD-Ports’ is a step to address such disputes through an alternative route to ensure faster resolution and in a cost effective manner and should be positive for the sector,’ Icra said.

SAROD-Ports is established under Societies Registration Act, 1860, working towards affordable and timely resolution of disputes in a fair manner and enrichment of dispute resolution mechanism with the panel of technical experts as arbitrators. The portal consists of members from Indian Ports Association (IPA) and Indian Private Ports and Terminals Association (IPTTA).

SAROD-Ports will advise and assist in settlement of disputes through arbitrations in the maritime sector, including ports and shipping sector in Major Port Trusts, Non-major Ports, including private ports, jetties, terminals and harbours.

SAROD-Ports’ is similar to provision available in Highway Sector in the form of SAROD-Roads constituted by National Highways Authority of India (NHAI). It consists of members from Indian Ports Association (IPA) and Indian Private Ports and Terminals Association (IPTTA).

It will also cover disputes between: Granting authority and Licensee/Concessionaire /Contractor.  Also, disputes between Licensee/Concessionaire and their contractors arising out of and during the course of execution of various contracts.

A concession agreement is a contract that gives a company the right to operate a specific business within a government’s jurisdiction or on another firm’s property, subject to particular terms. It will promote ease of doing business in the maritime sector because of the fast, timely, cost effective and robust dispute resolution mechanism. It will inspire confidence in the private players.

Model Concession Agreement is the core of public private partnership projects in India. It sets regulatory framework to implement PPP (Public Private Projects) in India. There are MCAs for national highways, urban rail transit systems, state highways and ports.

In January 2018, the government approved amendments to the Model Concession Agreement (MCA) to make the Port Projects more investor-friendly.  Under provision of additional land to the Concessionaire, land rent has been reduced from 200% to 120% of the applicable scale of rates for the proposed additional land.

In the landlord port model, the publicly governed port authority acts as a regulatory body and as landlord while private companies carry out port operations—mainly cargo-handling activities. The port authority maintains ownership of the port while the infrastructure is leased to private firms that provide and maintain their own superstructure and install their own equipment to handle cargo.

In return, the landlord port gets a share of the revenue from the private entity. Currently, most major port trusts in India carry out terminal operations as well, resulting in a hybrid model of port governance. The involvement of the port authorities in terminal operations leads to a conflict of interest.

The neutrality of the landlord port authority is a basic requirement for fair competition between port service providers, particularly the terminal operators. The role of the landlord port authority would be to carry out all public sector services and operations such as the award of bids for cargo terminals and dredging.

“SAROD-Port has been put together by the Concessioner and the Port Association. It will designate an export team and an expert team will address and resolve all disputes which will be decimated on time. Appropriate justice will be delivered,” the minister said.

SAROD-Ports will become the pivotal mechanism of hope, trust and justice in the port sector of India. It will lead to saving huge amounts of legal expenditure and time.

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