By becoming corporates, the ports will be able to enter capital market.Ennore will be the first to be corporatised, to be followed by the JNPT and Haldia. Being newer ports, none of these has the problem of huge labour forces that plagues other major ports. Haldia port, for example, has a workforce of 5,024 only against Calcutta's 12,304.

According to sources in CPT corporatisation will help Haldia port take quick decisions as a result of which turnaround time and pre-berthing time of vessels will be reduced. At present Haldia has an averageturnaround time of 4.32 days.

Haldia port has plans to develop a second berthing area to meet the growing traffic demands of around 40 million tonnes over the next five to seven years. The new area will have 10-12 berths, with each costing over Rs 20 crore. Since the CPT does not have the funds, Haldia will have to tap the market. The private sector may be allowed to have dedicated berths there.

Corporatisation will also give Haldia an organisational structure that will make it truly commercial. It will be able to set up trade promotion and marketing wings.

A committee, headed by CPT chairman C Babu Rajeev, has already submitted its report to the ministry suggesting changes in the Act, which is hindering the commercial activities of the ports.

According to a ministry study titled `Perspective Plan for Indian Ports Sector -- Vision 2000', total traffic in Indian ports will increase from 415.4 million tonnes (mt) in 2001-02 to 612.7 mt in 2006-07, and to 1273.2 mt by 2019-20. The government has alreadyapproved the formation of joint ventures between a major port and foreign port, between a major and minor port and between a major port and companies. This is expected to attract new technology and managerial practices while speeding up modernisation and optimal use of port infrastructure.

Union surface transport secretary R Vasudevan told an international conference in Mumbai last week that the proposed Bill will allow for joint ventures between major and minor ports without recourse to tenders.

Vasudevan said the government is considering the corporatisation of the port coming up at Ennore. It has been proposed to establish a company under the Companies Act of 1956 to develop and manage the port with private sector participation.

Vasudevan pointed out that Indian ports function as trusts and so cannot access the capital market. The trusts are administrative public bodies exercising both statutory public functions and commercial activities following a service port concept.

The thrust of the reformswill be on implementing the landlord port concept, where the port authority only owns the land and basic infrastructure and leases it out to operators. The commercial activities will be handled by the new companies.

Vasudevan said two routes can be followed to separate the statutory functions from the commercial ones.

First, the port trusts may be allowed to set up their commercial departments as subsidiaries of the main port company, with separate staff, accounting and management. These subsidiaries can then be sold to private operators or investors.

When the port company has fully shed its commercial activities, the core can become the new landlord port authority in the form of a joint stock company with a majority of shares being held by the Centre and state governments and municipalities. That is the formula now being implemented in Poland since 1997.

Second, the port trust can be corporatised as a whole and turned into a commercial operator, while its regulatory powers is vested in a new publicport authority. This was the formula implemented in Singapore in 1997, when the Port of Singapore Authority was turned into PSA Corporation, a port operating company, and the regulatory powers vested in the newly created Maritime & Port Authority.