Government to float new port tariff norms

The government is planning to change the tariff-setting norms at 12 major ports from cost-plus to an upfront payment system. The proposed change is expected to make the ports more competitive.

Under the current system, the license is granted to the bidder sharing the highest revenue with the port authority. The successful bidder is also assured a 15 per cent return on capital employed, while deciding the tariff. However, in the proposed upfront tariff system, the ceiling of the tariff will be fixed first, after which the bidding will be carried out on a revenue-share basis.

The move has been recommended by the Anwarul Hoda task force set up by the Planning Commission on tariff-setting mechanism and bidding parameters, for public-private partnership (PPP) projects at major ports. The task force which submitted its report two months ago, had suggested that the tariff cap be reset every five years for new licenses. However, the Finance Ministry feels that the revised tariff cap should be applied to both new as well as old projects.

Infrastructure financing norms relaxed

Production or commercial operations of an infrastructure project that may require bank finance, can now be delayed by a year from the scheduled date of completion. This is because now the loan given to these projects will be treated as a substandard account only if the delay is beyond a year. The previous norm was six months.

The revised instructions come into force with effect from 31 March, 2007. The delays in project implementation may involve restructuring or re-schedulement of loans by banks, and so to partially modify the asset classification, norms for infrastructure projects alone involving time overrun, have been revised.

NHAI empowered to clear road projects up to Rs.500 crore

The Central government has given its approval to National Highways Authority of India (NHAI) for clearing highway projects up to Rs.500 crore, while projects above Rs.500 crore will require the Public Private Partnership-Appraisal Committee's (PPP-AC) approval.

Until now, NHAI could clear projects up to Rs.100 crore and projects greater than 100 crores required approvals of PPP-AC and Cabinet Committee on Economic Affair (CCEA). Approval norms have also been eased for port and shipping projects. Now, only projects above Rs.250 crore will be referred to the PPP-AC. The earlier limit was Rs.100 crore.

Raising NHAI's approval limit for highway projects will ensure quick approval. The government will award national highway projects worth Rs.35,000 crore in 2007-08. The government has set a target of awarding 175 contracts covering a length of 15,803 km on Build-Operate-Transfer (BOT) basis by March 2008. The contracts are under different phases of the National Highways Development Programme (NHDP).