1

Land Location

The GMB will identify the port location and delineate the area of waterfront and back-up land. In the event that the Developer Proposes and alternative site in the vicinity of the specified area, the Government may consider the same.

2

Land Acquisition responsibility

Acquisition of land for the project will be the responsibility of the Government/GMB.

3

Terms of lease for land

Land will be allotted on lease to the Developer for a term concurrent with the term of the concession agreement.

The Lease rental will be charged for the land by way of a structured lease rental payment mechanism. The determination of lease rentals would be based on the cost of acquisition of land incurred by the Government.

4

Land expansion

The Government will facilitate future expansion of port related activity, and the setting of industrial parks, commercial ventures, roads and railways etc. in the vicinity of the port.

To accomplish this, the Government will adopt one of the following options :

OPTIONS 1 :

The Government will acquire, and keep in reserve for later use, land in the vicinity of the land earmarked for development of the port.

OPTIONS 2 :

The Government will not allow any development on the land in the vicinity of the land earmarked for development of the port (Say, within 500m distance of the port limit.

5

State Government Tax Concessions

The Government may extend tax concessions to the projects by way of lowered Stamp Duty and Registration Fee.

6

Demarcation of Notified Area

As an incentive to the project, the Government intends to demarcate the port area and award it the status; of a "Notified Area".

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7

Site Studies

GMB will make available with the notice inviting tender for the ports to be privatized, the latest available traffic study details, and the site-specific engineering pre-feasibility report.

Developer, however would be welcome to verify these studies and conduct additional studies at the proposed site.

The expenses incurred by the Government on site studies made available at the time of tendering would be recoverable from the selected developer.

The selected Developer would be required to undertake (among others) the preparation of the Detailed Project Report and the site-specific Environment Impact Assessment. GMB will assess the Detailed Project Report to ensure its conformance with the principles of the Concession Agreement.

8

Configuration

The Developer will have the flexibility to decide the Capacity/ Configuration/Cargo for a site, subject to conformance with parameters of environment safety and technical sufficiency.

In order to ensure that the solid cargo requirements of the hinterland are adequately catered to, the Government may stipulate, on a case to case basis, the solid : liquid cargo proportion to be adhered to by the port, and the specific cargo which the port must handle in the first phase of construction of the port projects.

In the First phase, the Government may also stipulate restrictions on the handling of certain cargo in instances where a sizeable investment in capacity for the said cargo is already committed in a neighbouring port.

All such stipulation would be laid out in the Concession Agreement for the port.

9

Clearances

The selected Developer would be responsible for obtaining all relevant clearances from the Central Government and State Government ministries / departments / agencies etc.

The Government also intends to set up a single window mechanism, to facilitate speedy processing of all State level clearances.

10

Construction

Under the BOOT Package, the Developer would be charged with full responsibility; for the creation of port infrastructure as per the contracted terms.

During construction the Government would concern itself only with basic inspection, in order to assess on-site progress and adherence to various contracted quality standards and time schedules. The Government may engage external agency for this purpose.

GMB would be willing to provide technical staff on deputation during the construction stage of the port.

11

Financial Stake of Developer

The Developer would be free to finalize the means of finance for the project and to structure the financing for the project.

12

Government Stipulation on Developer’s Financial commitment

The relevant member(s) forming the bidding consortium of the project company must retain their financial commitment to the project for minimum period of five years of commercial operations. Government permission will not be required for reducing the financial commitment upto 51% of the equity in the port project within the first five years of operation, but further reduction in the stake during this period will require the concurrence of the Government.

13

Financial Stake of Government

The Government intends to participate in the development of Joint Sector ports as an investor and co-promoter. This will be effected by means of equity participation in the port company by various agencies of the Government.

14

Infrastructure Development

In order to facilitate port development, the Government intends to initiate concomitant development of road and rail corridors and industrial parks.

15

Linkages to Transport corridors

The road and rail linkages from the port to the nearest highway / rail head will be structured as separate BOOT packages, subject to the relevant legislations. The port Developer will have the first preference of undertakings this development. In the event that the offer is declined, the same would then be offered to other private investors.

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(III)

OWNERSHIP RIGHTS OF DIFFERENT PARTIES

1

Ownership rights of the Government

The Government is vested with sovereign rights as owner, overseer and conservator of the waterfront and licensor to the Contract.

2

Ownership Rights and responsibilities of the Developer

The Ownership rights of the Developer would include

• The right to mortgage hypothecates or to execute such covenants as may be required for effectively vesting a charge on the port assets in favour of a lender to the project.

• The right to sell, convey or transfer to another entity, the right title and interest and concession vested in the Developer, on the request of a lender to the project, subject to contractual documents. The new Developer will be selected by the lender in consultation with the GMB, and if necessary, the terms and conditions of the Concession Agreement may be renegotiated.

(IV)

OPERATION OF THE PORT

(A)

Operational Issues

1

Conservancy

The Developer will take on the responsibility for the conservancy function of the port on behalf of GMB.

2

Port Operator(s) and sub-contracting of services

The Developer may operate the port as a Full Service or as a Landlord Port. The Government/ GMB will Permit subleasing of facilities or subcontracting of services, provided that the Developer continues to remain responsible to the Government for due performance under the contracted terms and conditions

.

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3

Pilotage Provision

Pilotage of vessels within the particular port limit; would be the responsibility of the port operator. GMB will lay down qualification criteria for pilots and grant licenses permitting deployment of pilots and appointment of pilotage agencies, which would be subject to periodic review.

4

Obligatory Services

In the larger interests of the port’s safe and un-hindered operations, the Government would specify from time to time, a list of essential services (non-commercial) services, (typically in respect of safety, health, environment etc.) that the Developer would be obligated to render. The broad areas of service in this respect would be stipulated in the Concession Agreement.

5

Value Added Service

The Developer would have complete freedom to offer cargo related value added services in the port premises.

6

Expansion of facilities and Competition between ports

(a) Expansion of facilities:

The developers would be encouraged to add capacity over and above the capacity contracted in the concession agreement. Such expansions will be eligible for incentives by the Government, such as land acquisition, extension of royalty holidays etc.

At the time of the signing of the Concession Agreement, the Developer will submit, and get approved by GMB, a broad perspective plan for the development of the port in the next fifteen to twenty years. The Government will not place restrictions on any expansion and further development of the port which is within the envisaged perspective plan, subject to statutory clearances. Expansions outside the scope of this plan would be subject to the approval of the GMB.

(b)Competition between ports

The Government would encourage competition between ports. The following, however, would be ensured.

*The development of the ten ports would be appropriately phased over a period.

*Permission to set up captive jetties would not be granted, save in exceptional circumstances.

7

Manpower

The Developer would have freedom in the recruitment of manpower for the port. GMB’s resource pool of maritime experts could be considered for the same.

8

Operational Flexibility

The Developer would have complete operational autonomy (within the framework of relevant legislations) in respect of the operation of the port.

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(B)

Commercial Issues

1

Tariff Flexibility

*The Developer will be given complete flexibility in setting and collecting all tariffs. This would entail, among others, the denomination of tariffs in foreign currency and collection of the same in Indian Rupees.

Role of Regulatory Authority:

The port regulatory authority will act as a forum where representations with regard to unfair/monopolistic behavior relating to tariffs can be made by various parties. The regulatory authority will act as an independent body in this regard., without interference from the Government.

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2

Royalty Payments to the government

A "Waterfront Royalty" will be set by and payable to the Government by the port. This will be charged on a per-ton-per-type-of-cargo basis.

This royalty will be payable by all new ports, irrespective or the ownership structure. GMB will publish a schedule of charges for this purpose and these would be subject to revision at specified intervals. The revision will be done through a pre-specified formula or a transparent mechanism.

The Government will not partake a share in revenue from any other core/value added port service undertaken by the Developer.

3

Royalty Concessions

The Developer will be granted a concession on the Royalty payable to the Government for a specific period of time. During this period (referred to as ‘Royalty Holiday Period’), the Developer is liable to pay only Rs.10 per tone of liquid cargo and Rs. 5 per tone of solid cargo.

The balance Royalty will be permitted as a set off against the approved Capital Cost @ of the project. The duration of the Royalty Holiday period will extend till such time that the total approved capital cost of the site is set off against the concession in royalty payable. After the end of the Royalty Holiday Period, full waterfront royalty, as per the published schedule, will be payable to the Government for the rest of the BOOT period.

In the case of the Developer undertaking a "Major Expansion" of the facility, the Royalty Holiday period could be extended by the Government. Maximum of two major expansions would be eligible for this extended concession.

The royalty concession will cease automatically on completion of BOOT period as the port will revert back to Government / GMB after the BOOT period is over irrespective of whether the capital cost is completely set off or not.

4

Regulation

The Government will provide for the institution of an independent Port Regulatory Authority in regard to all aspects concerning the working of a port and the sector as a whole.

The mandate for the Regulatory Authority will include environmental protection, safety, relief & rehabilitation, issues of security & national interest, protection of port user interests, and any other matter that is of public interest.

V

TRANSFER OF ASSETS

1

Duration of the concession period

The duration of the BOOT Package would be 30 years. The BOOT period would commence after three years or the period mentioned in the document by the developer whichever is earlier. The zero date will be date of signing the agreement between GMB and the Developer.

A BOOT period greater than 30 years could be considered for projects which entail sizeable capital investment on account of site specific marine conditions and backup infrastructure such as road/rail linkages.