The move will enable ports to streamline accounts, take decisions on commercial principles, and come a step closer to a regular corporate structure. The new practices will also accurately reflect the financial health of the ports. Since these ports are classified as trusts under the Major Port Trust Act, 1963, currently their accounting principles are completely different from corporates.

The move is also a precursor to the corporatisation of some of the major ports. The first of these is Ennore. Estimated to cost Rs 950 crore, the port will be an entity independent of the Chennai Port. It will be fundedpartly by Chennai Port and partly the ADB. However, the ministry has clarified that for the other ports, the decision to corporatise will be left to the individual port managements. In a proposal currently before the cabinet committee, the ministry has sought to create an enabling provision that would give port managements this choice. The first major port to opt for corporatisation is expected to be the Jawaharlal Nehru Port, Mumbai. Since the port is just nine years old, valuation of assets will be easier. Besides, other factors like work practices are more in tune with current needs than in the case of the other ports.

Also, JNP will be the first port to face the onslaught of competition from the private sector. Sharing their quayside is P&O Ports, which is constructing a container terminal, expected to be operational by 1999.

"Putting both players on a level footing is therefore important," according to Vasudevan. The biggest benefit of the corporatisation is expected to be the ability to raise fundscommercially, so far forbidden under the Major Port Trust Act. Ports like New Mangalore and Haldia are expected to follow JNP. However, ports such as Mumbai, Chennai and Calcutta, most of which were built in the last century would find corporatisation more difficult, as valuation of assets will be a difficult task. And yet most of these are expected to face extremely tough competition, not just from the expansion of capacity in Colombo, but from a slew of private sector promoters, invited by state governments to set up state-of-the-art port facilities. Since none of these will come under the purview of the Major Port Trust Act, they will have the edge in offering more efficient services.

The issue of autonomy to ports has been an ongoing one. In an attempt to grant the ports more leeway to take their own decisions, the ministry last year allowed them to make investments up to Rs 50 crore without seeking prior permission.

Non-negotiable clauses to be added to Bharati docks bid

The ministry ofsurface transport has decided to introduce non-negotiable clauses in the privatisation bid of Bharati docks at Chennai Port. Since the technical and financial bids have already been submitted by the three bidders, P&0 Australia, Port Authority of Singapore and Hutchinsons, they will be allowed to give fresh financial bids in light of the changes made. Although the ministry has not indicated what the non-negotiable clauses would be, they are expected to be either the royalty per tonne to be paid to the Chennai port or guaranteed throughput. The ministry had opted to invite three global port management players instead of competitive bidding for the privatisation of the 600 metre, 2 berth container terminal. All three have already made their presentations to the authorities.