The Union Minister for Ports, Shipping & Waterways Sarbananda Sonowal has announced the revised Model Concession Agreement (MCA) - 2021 for all future PPP projects at major ports as well as projects which are already approved by the government but are still under bidding stage. 

He informed that there are more than 80 PPP/landlord projects in the sector with an investment of over Rs. 56,000 crore at various stages. Of these, 53 projects of Rs. 40,000 crore are under operation, whereas 27 projects of more than Rs. 16,000 crore are at an implementation stage.

 The Minister informed that with many changes drawn from best practices from across the sectors and extensive stakeholder consultation, the Model Concession Agreement – 2021 (MCA), will bring more confidence of developers, investors and lenders and other stakeholders in the ports sector and catalyze the investment in the sector. 

Looking ahead, the Ministry of Ports, Shipping and Waterways has clearly defined a pipeline of 31 projects of more than Rs. 14,600 crore to be awarded on PPP till FY25, and it expects that the new MCA - 2021 will generate enthusiastic response from the stakeholders. 

Talking about the key changes made in the Model Concession Agreement (MCA) – 2021, Sonowal informed that provision of Change in Cargo due to Change in Law or Unforeseen Events has been introduced for the first time. 

He said, there have been cases in the past wherein due to external and unforeseen factors, traffic for a particular commodity has dropped during the concession period thereby impacting the overall viability of the terminal. The concessionaire did not have flexibility to handle a different cargo and the asset constructed was not being utilized optimally. The Minister said, this provision will give the flexibility to undertake change in cargo in such a situation and reduces risk for the concessionaire. 

Sonowal added that under the new MCA, provision has been made for providing flexibility to the concessionaires to fix their tariff based on market conditions which will allow level playing field for the private terminals at major ports to compete with private ports for cargo. Further, to reduce risk to the lenders and make the project more bankable, provision of compensation for the concessionaire's event of default before Commercial Operations Date (COD) has been added. 

Another provision which lays out a process for extension of concession period on the basis of performance and mutual agreement has been introduced. 

Sonowal said, overall, more clarity has been provided in terms of responsibilities of both public as well as private parties while balancing the risks.