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Govt proposes Rs 400-cr equity component for JNPT

P. Manoj

NEW DELHI, March 27

THE Union Government is working out the capital structure of the Jawaharlal Nehru Port, the second major port in line for conversion into a corporate entity after Ennore Port.

According to a proposal under consideration, the Union Government's equity in the corporatised JN Port is likely to be fixed at Rs 400 crore.

The JNPT had accumulated debt worth Rs 1,728 crore as on March 31, 2000. This is expected to come down to Rs 1,600 crore by March 31, 2001. The Union Government is planning to fix a debt-equity ratio of 3:1 for the corporate JN port with a debt component of Rs 1,200 crore and an equity portion of Rs 400 crore, Government sources told Business Line.

The debt-equity profile of the corporate JN Port is expected to change over time as and when the debt is repaid by the company set up for operating and managing the port. ``The revenue streams of the port are sufficient and comfortable to service and rep ay the debt'', the sources said.

The JNPT was set up in 1989 mostly with loans taken from the World Bank and inter-port loans from Mumbai, Chennai and Kandla Port Trusts.

As in the case of Ennore Port, the JN Port will also be a wholly-owned Government company initially. The Government plans to divest its shares in the company at a later stage once the new company consolidates its operations.

However, unlike Ennore Port, the corporatisation of the JN Port revolves around amending certain provisions of the Major Port Trusts Act, 1963 for giving it a legal sanctity.

Since the basic idea behind the corporatisation plan was to divest the Government's holding in the corporate major port at a later stage, the Government feels that the transfer of assets and liabilities of the port to the corporate entity would pose a le gal problem.

Of all the major ports identified for corporatisation, the Ennore Port had a smooth sailing into the country's first corporate major port. Being a new port, Ennore was not notified as a major port under the MPT Act. It was straightaway put under the ambi t of the Indian Ports Act, 1908 and registered as Ennore Port Ltd under the Companies Act, 1956.

The legal issue on the transfer of assets and liabilities will crop up in the case of JNPT, Haldia Dock Complex, New Mangalore Port Trust and Mormugao Port Trust.

The Ministry of Shipping is all ready to approach the Union Cabinet with the specific intent of carrying out two amendments to the MPT Act. One, to introduce an enabling provision in the Act to de-notify the major ports slated for corporatisation from th e ambit of the MPT Act. Currently, all the 11 major ports in the country are run as trusts since they come under the purview of this Act.

Secondly, Section 29 of the Act will have to be amended to facilitate the transfer of assets and liabilities of the Central Government from the Port Trust Board to the new corporate entity.

The Union Cabinet is soon expected to consider the note prepared by the Ministry of Shipping to amend the MPT Act together with the draft legislation of the proposed amendments.

The sources said that the Ministry of Shipping may go in for an ordinance to give effect to the proposed amendments to the MPT Act so as to expedite the corporatisation of JNPT, NMPT and Mormugao Port Trusts in view of the uncertain political scenario an d avoid delay in getting Parliamentary nod for the amendments.

``If all goes well, the Shipping Ministry will be ready with the corporatisation plans for the four ports by May this year'', the sources said.