Port operations

Approval

What government approvals are required in your jurisdiction for a port operator to commence operations following construction? How long does it typically take to obtain approvals?

As mentioned above, the mandatory approvals from the Ministry of Environment, Ministry of Labour, Ministry of Health, local municipal corporations, etc, are required for a port operator to commence operations following construction. The time taken for the approvals vary on a case-by-case basis.

Typical services

What services does a port operator and what services does the port authority typically provide in your jurisdiction? Do the port authorities typically charge the port operator for any services?

The port operator and the port authority primarily provide services such as connectivity and transportation of goods and passengers to and from the hinterland. They also provide services such as:

  • loading and unloading of goods;
  • transhipment of goods and passengers;
  • ferry services;
  • cargo handling;
  • container terminals;
  • cargo handling equipment;
  • warehousing; and
  • construction of dry docks and ship repair facilities.

The port authority typically charges the port operator concession licence fees, rent or revenue sharing.

Access to hinterland

Does the government or relevant port authority typically give any commitments in relation to access to the hinterland? To what extent does it require the operator to finance development of access routes or interconnections?

Yes, the government or relevant port authority typically gives the port operator access to the hinterland. Based on negotiations and predetermined criteria the operator is required to finance the development of access routes or interconnections.

Suspension

How do port authorities in your jurisdiction oversee terminal operations and in what circumstances may a port authority require the operator to suspend them?

This is subject to the terms as laid down in the model concession agreement, which may include the port operator to submit to the port authority periodical reports regarding cargo traffic, tariffs collected in respect of facilities, and services availed by the parties.

One of the reasons the port authority may require the port operator to suspend the services would be declaration of an emergency by the government.

Port access and control

In what circumstances may the port authorities in your jurisdiction access the port area or take over port operations?

It depends on a case-by-case basis as per the terms mentioned in the model concession agreement. However, typically the port authority may take over the port operations when the port operator fails to discharge their duties and obligations as mentioned in the PPP agreement.

Failure to operate and maintain

What remedies are available to the port authority or government against a port operator that fails to operate and maintain the port as agreed?

The remedies available to the port authority or government against a port operator who fails to operate and maintain the port as agreed, are based on the terms as set out in the model concession agreement. However, the same would not waive of their rights from other remedies that may be available to them under the existing laws

Transferrable assets

What assets must port operators transfer to the relevant port authority on termination of a concession? Must port authorities pay any compensation for transferred assets?

The model concession agreement provides for the assets to be transferred after the termination of concession. Typically, the model concession agreement consists of an annexure of all the assets that will be transferred to the port authority on termination of a concession agreement. Typically, the compensation payable by the port authority to the port operator, due to the port operators’ default would be the lowest of:

  • the book value;
  • 90 per cent of debt due; or
  • the actual project cost.

However, in certain cases no compensation shall be payable to the port operator if he fails to maintain an insurance cover.

Further, if the concession agreement is terminated by virtue of the expiry of the concession period, the port operator in that case would not be entitled to compensation and would have to hand over or transfer peaceful possession of the project site, port’s assets, project facilities and services free of costs and encumbrances.