Logjam in logistics

DECONGESTING THE NATION'S economic gateways has for long remained an ignored facet of the overall reform process. The commissioning of the Ennore port by the Prime Minister, Mr. Atal Behari Vajpayee, is therefore an initial step towards expanding the infrastructure requirements in this vital sector. It also symbolises the changed thinking in port management, from trustees to corporates. Belated though its commissioning may be, Ennore marks the initial step towards corporatisation of ports. It is an experiment of sorts as well on issues such as splitting the operations of an existing port to meet specific requirements of a burgeoning economy. In servicing the Tamil Nadu Electricity Board's coal movements, the Ennore port marks the first move towards unclogging the historic harbour and enabling the Chennai port, which pioneered containerisation in India, to concentrate on the rapidly growing container traffic. As the Ennore model aims at reducing the burden of the main Chennai port, its performance will be vital for future similar exercises and also determine the extent to which Indian ports can meet the rising expectations of international players. India's plans to develop mega ports as Asian hubs in maritime trade also require autonomy to ports and exposure to competition.

In its corporate nature, Ennore seeks to undo the past framework of ports operating under boards of trustees that were constrained by the need to seek Union Government clearance for massive expansion plans. Consequently, the expectations placed on this nascent facility transcend that of a mere service provider. The strain on the Indian port sector, which started to tell towards the mid-1990s, was largely a result of exponential increases in the traffic volumes and the inability of the existing infrastructure to meet the growing demands. This exercise in corporatisation should not be restricted to a transition from one form of Government control to another - from a trust board to a board of directors - but should go on to address issues such as privatisation and unbundling. In this context, the Ennore experiment should be observed for the performance of ports as corporate bodies prior to further decontrol and privatisation. While there is bound to be more freedom for such entities, it would also be important to avoid the pitfalls that various Government corporations have fallen into. Delays in decision- making and an inherent reluctance on the part of private investors to place their confidence in such bodies are cases in point.

Shorn of responsiveness to market forces, Indian ports for long have rested in safe harbours. But they cannot do so in the years ahead when they would have to seek huge private investments. Gaining the confidence of port-users as well as investors assumes considerable urgency for translating Mr. Vajpayee's ``strategy of partnership'' between the public and the private sectors for infrastructure development. Inherently monopolies on account of huge capital requirements, the Indian infrastructure sector has remained under near-total Governmental control until the last decade. Elsewhere in the world, the infrastructure sector moved away from Government control even earlier. A specific instance is that of Indonesia, which witnessed rapid increases in revenue generation after the management of a considerable number of ports was decentralised and brought under public port corporations. While comparisons with the ports of Colombo and Singapore will continue to be made, the Indian port sector would have to be desilted of its accumulated systemic sedimentation before it can compete meaningfully with these ports. Sparking a competition among Indian ports should be one consequence of the move towards corporatisation and could serve as one good starting point.

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