The Ministry of Shipping is keen to corporatise major ports as part of Maritime Agenda 2020. Though corporatisation aims to reduce the bureaucracy while allowing the government to retain ownership of the corporate entity, walking the theory is a tactful act indeed. But the roadmap is clear and the change agent is sure to come, sooner or later.
by Radhika Rani G.
Media reports have been mentioning for some time that “the much-awaited corporatisation of Jawaharlal Nehru Port Trust (JNPT) will be carried out by the end of the calendar year 2011.” The Shipping Ministry too has been stating that a decision was taken in principle, after consulting port management experts, to corporatise the major ports in a phased manner.
The government is keen to bring in a sleek corporate model for ports to thrive in a competitive economy, especially when private ports are coming up close to the federal ones and making money through exim activity. “It is necessary,” says Shipping Secretary K Mohandas, “that major ports are also prepared fully in terms of organisation, financial self-sufficiency and efficiency to face the competition.”
Since a port is not really a social entity, but more or less a commercial venture and an infrastructure service provider which has to function on a profit-making basis, the ministry believes the time is right to convert ports into corporate structures. “These enterprises,” the ministry clarifies, “with financial and functional self-rule will still be fully owned by the government.”
Fears & doubts
But a notional roadmap at the moment has been causing a sense of insecurity in direct stakeholders, especially officers and grassroots workers on the waterfront. They fear impending privatisation of the port and loss of employment. “We will lose our land and livelihood,” says Dinesh Patil, president of JNPT Kamgar Ekta Sanghatan. The workers activist tells Maritime Gateway that the fate of 1,500 permanent workers of the port hangs in the balance as the Central government that bartered their land with jobs and promise of sops is now putting their future in question.
His views are supported by Bhushan Patil, general secretary of Nhava-Sheva Bandar Kamgar Sanghatana. Bhushan sees corporatisation as the first step towards privatisation. “It will open the door of the port estate and property belonging to the present board of trustees to private ports operators, who will eventually gain control,” he says.
To enable a dialogue on the issue and a consensus thereby, a meeting has been scheduled between the chief labour commissioner of the labour ministry and the five recognised workers unions. Representatives of the Water Transport Workers, All India Port & Dock Workers, All India Port & Dock Workers’ Federation; Port, Dock & Waterfront Workers’ Federation and Indian National Port & Dock Workers' Federation, will meet the CLC on June 6 to discuss issues threadbare and clear ambiguities.
“Our agenda is to safeguard the interests of our members,” say the Patils, both labour trustees on the JNPT board. The deliberations, they express hope, will result in a win-win for them and the government.
Process in motion
Considering that the government has consulted experts and studied port management models before coming up with a workable port structure, it could have set off corporatisation through a more consultative process, say industry leaders. While the move is definitely welcome, says B Sridhar, India director of Bengal Tiger Lines, there is bound to be reluctance on the part of labour unions.
Being the largest port in India handling 65 per cent of the country’s container traffic, JN Port, a 22-year-old entity has over the years developed its own worker legacy. And breaking the ice with them is quite a task. “The government might succeed in changing the legal status of the port, but it has to take extra efforts to change the mindset of the people working there,” opines Shashank Kulkarni, secretary general of Indian Private Ports & Terminals Association.
India has been resolving workers issues since 1991 when it started economic reforms through neo-liberal policies. Yet, creation of a congenial atmosphere for transition in today’s market economy is still beset with communication issues. Stakeholders complain that they have not been taken into confidence and so ignorance and resistance prevails among them.
“A separate taskforce could therefore have been established with competent people who can take the process forward,” says Sridhar. The senior management of the port, say sources, is working on these lines.
Post-transition, major ports might require no immediate change functionally and operationally. But a positive mindset does matter down the order. “So empowering the management to do business in the second decade of the 21 century is vital,” admits the Shipping Secretary.
But how can the transition of ports be smooth? “This is simple,” says S N Srikanth of Hauer Associates. “Firstly, the government must give far greater administrative freedom to the port trusts once corporatised. Secondly, industry professional must head the corporatised ports,” says the expert in port policy and development.
Such a model holds great promise for critical ports like JNP and Chennai, where quick decision-making and trouble-shooting are required. For instance, important decisions on expansion plans or dredging at JNP have been veering in a labyrinth of things owing to roadblock on the government front. “Given the situation, a corporate structure ensures a freer hand for the port management. It also makes the officials accountable,” says Capt R R Iyer of Seahorse Ship Agencies.
Exploring the options
Several stakeholders, content with the status quo, suggest that innovative functioning amendments can be introduced that do not drastically affect the work model or morale.
According to a study by the Public-Private Infrastructure Advisory Facility, there are two types of corporatisation models. The first model’s goal is to transform former statutory authorities into government-owned enterprises – this means that a corporatised port authority would have a constitution consisting of a memorandum and articles of association that define the nature of the company and the manner in which the affairs of the company are to be conducted based on the ‘companies act’ or ‘corporations act’ in force.
The second model involves the creation of a statutory government-owned enterprise (corporation) by specific legislation. This would mean that there is the potential for some degree of public (national, regional, or municipal) input and scrutiny. It also means the introduction of tailor-made provisions, such as those relating to accountability and public control.
However, the most problematic issue affecting corporatised port authorities is the mix of public and private objectives, the PPIAF study says. “The rationale behind this type of reform is the expectation that corporatised ports operate as viable and effective businesses. However, while part of the ports’ enabling legislation may state that they should pursue commercial objectives and operate as effective businesses, the public shareholders have responsibilities other than strictly commercial ones, such as the delivery of public goods.”
Ultimately, the choice of one of the alternative models when corporatising a public port authority is a political issue, the PPIAF study adds.
The JNPT workers union staunchly believes that the government, instead of scrapping port trusts to introduce corporate boards, could give more autonomy to the existing board of trustees. If need be, the board could draw members from the ministries of finance, shipping, commerce and allied departments for diverse representation and informed decision-making, Dinesh Patil adds.
The existing ports, according to Sridhar, can still be run as corporate bodies wherein accountability and port performance can be enhanced. “This can be done by bringing in professionals onto port management boards,” he opines. The shipping ministry, on its part, is not averse to the idea. It says independent professionals are rarely nominated to port trusts and can be brought on board to seek valued inputs for better port functioning. But attracting them onto an evolving CEO-director model, in the midst of competition, is quite a task.
The tight fit
New generation ports being run as body corporates have been making inroads in throughput and profits while maintaining economies of scale. On the other hand, major ports though handling 74 per cent of India’s cargo traffic are yet to sustain growth levels and meet global standards.
A pruned structure seems to fit the bill. For example, Ennore Port has only 90 enrolled staff. “As we handle PPP-driven projects, we continue to stay trim,” says PRO Atchayanathan. But other major ports too have been cutting their size by freezing on fresh recruitment, points out a senior representative of the Transport and Dock Workers Union. “Mumbai Port has not been recruiting organised workers since 1991. This could be the case with other major ports too,” he adds.
Still, a slim structure is an advantage for Ennore. “Ours is a no-strike, no-lockout model,” elaborates Atchayanathan drawing attention to productivity and profits. The port works on a landlord model, just as 88 out of 100 around the world do. It was recently conferred with Mini Ratna status by the Government of India for its impressive performance. The 10-year-old port could attract an investment of Rs 1,200 crore on various terminals and harbour crafts from private entrepreneurs and maintain a low operating ratio at 25.80 per cent during 2008-09.
But analysts point out that Ennore Port, despite having started big amid great expectations, is yet to reach the desired level. Though terminals for car, coal and iron ore exports and connectivity projects for rail and road are being developed, its Rs 41.46-crore profit for the financial year 2009 is way short of potential.
Similar doubts are being expressed about ports going the landlord way. But JNP is a class of its own, says an industry observer. “Since the port is the destination choice of importers and exporters, it can perform better and promise great results through an overhaul.”
“India’s experiments with corporatisation, says Srikanth, “have been mixed at best, since the government refuses to let go of its hold on the corporation. Ennore Port is a good example.” Where India is concerned, there appears to be little benefit in corporatising ports without privatising them, he says. “Corporatisation in India should be seen as a step towards privatisation. Any protestations to the contrary lack credibility.”
The question therefore seems not so much about the new setup as about making the most of it as a good-fit money-making model – where headlines are made and heads can roll. So, at the end of the day, it’s a tactful walking of the corporate talk and giving sure answers to rapidfire questions like “What are the deliverables?,” “Show me the money” or else “You are fired!”
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