No alternative to privatisation of ports (1/6/2001)
Daksesh Parikh

Complete privatisation may not necessarily be the right panacea for ensuring the survival and growth of our ports in India. Especially in the competitive environment where bigger and bigger cargo liners want to discharge more and more cargo and move in and move out as swiftly as possible. Privatisation does not necessarily underwrite improved efficiencies, lower costs and faster turnaround of cargo liners. But given the harsh circumstances and the bleak outlook faced by our ports we may have no alternative but to try it out.

Take the case of the 127-year-old Mumbai Port. Obsolete equipment, insufficient berthing facilities and lack of convenient storage space for containers have led to steady erosion in its fortunes. Bufetted by sliding traffic on one hand and higher operating costs on the other, the port has been forced to vacate its premier position and slide down to the fourth rank.  Faced with competition from the neighbouring Jawaharlal Nehru Port the Mumbai Port Trust has declared a loss of nearly Rs 500 crore for the year ended March 2001. If anything, the MbPT is clearly a classic example of the failed Landlord Model. Running of ports just cannot be left to the city owners.

Being the biggest landlord in the country owning maximum land in Mumbai with adequate reserves built up over the years, the MbPT may be able to absorb these shocks. It has already drawn up a blueprint plan involving private parties for salvaging the portís pristine glory. Right investments may help the port upgrade its facilities and reduce inefficiency.

However, more than investments what is really required is a thorough overhaul of the operational systems. Port managers must run it as a commercial business for which professionals have to be employed. There are not many port and terminal managers in government owned and managed ports who understand the complex nature and essential requirements of an efficient and highly productive port. For too long the inexperienced bureaucrats appointed at the whims of the government were allowed to man the top management berths. Not only in appointment but also in operational matters the government interference undermines the efficiency of the ports. This interference has to be marginalised, if not eliminated totally.

Professionalism has to be ushered in along with full functional freedom for port manager. This is necessary not only to ensure responsibility but also to deal with the problems of labour. For without the full support of labour, any reforms, including partial or full privatision may well have to be jettisoned. Costly social unrest may jeopardise the port terminal operators and also the other stakeholders like exporters, ship owners, shippers and consumers.

MbPTís ambitious restructuring exercise can well charter a new chapter in the history of shipping and become a harbinger for change.

Copyright (c) 2001 Economic Research India Limited